It looks like he did.
This story is just starting to break, and even though not all the facts are in yet, it’s looking like a lot of pre-construction condo buyers are going to lose their deposits, and a Toronto lawyer is going to be in major trouble for allowing a developer to access funds that were in trust.
I’m not going to pat myself on the back here and suggest that this is yet another reason why you shouldn’t purchase pre-construction condos, since this is the first I’ve heard of this happening.
But if it can happen once, perhaps it can happen again…
To use a term from today’s social media world, this story about Centrium Condos is certainly “trending.”
I awoke on Thursday morning to see two emails referencing Garth Turner’s tweet about the subject, and by the end of the day, I had been emailed by SIX people suggesting it’s a good topic for Toronto Realty blog.
So what is the story in a nutshell?
From what I can tell:
The project known as Centrium Condos fell through, the developer sold the land, and the lawyer for the original developer released the deposits to the developer.
But let’s start from the beginning…
Sadly, the thread starts in 2009, when excited condo buyers were posting comments about floor plans, pricing, features, and pre-sale events.
The thread goes up to today – August 22nd, where the entire last page consists of comments from desperate buyers, asking others to “spread the word” and contact news programs, newspapers, bloggers, and of course – Toronto Police.
I read through all fifteen pages of comments, and it’s a miserable story.
I know you all don’t have time to read through the 15 pages (although if you have time, do it…), so let me summarize the bullet points, and you can see how the situation progresses over time…
September 10th, 2009, “Solaris” writes:
The builder for this project is Centrust Development, which sounds like yet another unknown ‘one project’ developer … so purchasers in this project should be aware of the risks involved (although the regular consumers don’t look into these things and only complain later.
September 11th, 2009, “Solaris” writes:
Secondly, the Rezoning application was just submitted to the City of Toronto Planning Department on September 3, 2009 (source: http://app.toronto.ca/DevelopmentApp…derRsn=2484738) together with an application for rental housing demolition & conversion
For everyone else who’s seriously interested in this project, I strongly urge you to give the City’s Planner a call to find out for yourself, Mark Chlon @ 416.395.7137.
September 15th, 2009, “Luxome” writes:
Do you know if the “Agreement of Purchase and Sale” is available for buyers to sign? Because as far as i know, people who bought previously only signed an “Investors Agreement”.
September 15th, 2009, “PinkLady” writes:
I just signed one, I don’t remember the title, but not the “Agreement of Purchase and Sale” for sure. I am new to pre-construction or real estate as a whole. please help me understand the difference
September 15th, 2009, “Luxome” writes:
That’s exactly what they called it, “Investor Commitment Agreement”. Your basically right on. It’s a $5000 deposit, which is held at their Lawyer. They called the $5000 deposit a “Commitment Fee”.
January 24th, 2010, “aibo” writes:
Purchase Agreement is ready for signing. However, the builder will not honour the ICA.
March 28th, 2010, “PinkLady” writes:
Yes, I was called to sign the Agreement of Purchase of Sales, the price is 15% higher than the ICA I signed.
The thread at www.urbantoronto.ca jumps from April 9th, 2010, to February 4th, 2014.
The posts are numbered, and #75 from 2010 leads directly into #76 from 2014, so I’m not sure if the thread was shut down, or suspended, or if posts were deleted and renumbered.
In any event, the posts and comments in February of 2014 all refer to people looking to get their money back.
And in March of 2014, the readers seem to realize that the land the project was scheduled to be built upon was actually sold by the original developer, to a third party.
March 18th, 2014 – “Marcela” writes:
This is where the Realtor and the lawyer being to have their lives turned upside down!
March 18th, 2014, “ezyt” writes:
This is very frustrating. I went to “Centrust Group” office (address: 1125 Finch Avenue West) and there is no office; they have supposedly left the location months ago and nobody can get a hold of them.
April 10th, 2014, “Luxome” writes:
(Referencing the lawyer) She was pretty useless. She won’t speak to anyone who is not represented by a Lawyer. They are working on releasing deposit refunds to those represented by lawyer.
Pretty ridiculous that we have to hire lawyers to get our money back! Stupid makes absolutely no sense.
April 18th, 2014, “ezyt” writes:
(Referencing photo attached) It seems like this is going to be the new developer “Group Development Corp” (btw, sounds like another first time builder).
I should say I am as frustrated as you are, I want to get my deposit back ASAP.
May 22nd, 2014, “airdavid46″ writes:
My purchase agreement showed that the builder’s lawyer is Meerai Cho. I also tried to contact and make an appointment with her but no use.
Yesterday I went to meet my lawyer who help other two clients with this same Centrium condo case. He told me that in 2010, the builder’s lawyer was from Bratty law firm. And the cheques were written to Bratty. But in 2011, which is my case, the builder’s lawyer changed to Meerai Cho, and all the deposits went to Meerai Cho trust account. My lawyer does not really know why they switch the lawyer. What he is going to do is to first fax a letter to Bratty law firm and see if my deposit are there. If not he would contact Meerai Cho. One of his client already received the refund from Bratty. But my lawyer has no confidence that my case would be that easy.
June 23rd, 2014, “Luxome” writes:
So the vendor’s law firm, Bratty’s, is working on getting court order to release the funds. Apparently, the builder cannot be reached to sign the Mutual Release.
There is no end in sight until an order is received from the court
August of 2014, the original lawyer for the developer starts to issue this letter:
We no longer represent the vendor, 1772521 Ontario Inc., with regards to the project known as Centrium at North York.
If deposits were made payable to our firm under an agreement of purchase and sale, those deposits continue to be held in our firm’s trust account.
The next step in this matter will be an Application hearing in the Ontario Courts regarding a protocol for the return of deposits to purchasers. That hearing will likely take place in September of 2014. Once the Court Order is issued, our firm shall follow the deposit return protocol set out in such Order.
At this time, we cannot comment on the timing of the issuance of said Order but hope that this matter is resolved as soon as practicable.
C (416) 300-0292
August 12th, 2014, “centriumvictim” writes:
In 2013, the construction site for Centrium was auctioned away to another party already. Meerai Cho had given away our money to the developer Joseph Lee, who had already fled to Korea. Meerai Cho as a trustee should not have done this, and this is considered illegal. This money, which is more than 15million (possibly twice of this amount) dollar, should be paid to Joseph lee after the construction completed.
August 12th, 2014, “dmkyu” writes:
I heard Meerai Cho has declared Bankruptcy.
August 15th, 2014, “dead” writes:
Just heard from my lawyer said Meerai Cho declare the bankruptcy, and a creditor package received in e-mail. She has $0.00 net in her account. What the mother Fu*ker!!!
Her reason is: “I was retained to act as the solicitor for a builder/developer (“Developer”) of a condominium project in Toronto. In that capacity I received, in trust, deposit monies for commercial, hotel and condominium units totaling approximately $12.1 million. In error I released these funds to the Developer who absconded with the funds.”
August 15th, 2014, “betty li” writes:
Again: File# 2688289, Police officer: Choi - 9439 Address: 30 Ellerlie Ave – 32 division
Or File# 2014-2539937 Police officer: Mr. Bennoch Address: 50 Upjohn Rd - 33 division
Both file# you can use.
August 18th, 2014, “Alik” writes:
I believe our goal at this stage should be draw as much attention as we can.
I highly recommended everyone to do the followings:
1.Call the police
2.Call the Law Society of Upper Canada (check out the compensation Fund at : http://www.lsuc.on.ca/with.aspx?id=428)
3.Inform the MP
4.Inform the media (any kind of media would be great)
And you can guess where it goes from there.
Keep in mind, that the above comments are not fact, and are just comments.
Speculation is rampant in that thread, but I believe we can draw a few conclusions.
It looks like the developer was originally represented by a law firm called “Bratty’s,” and the buyers whose deposits were held by this firm either received them back, or are in the process of doing so.
The developer was then represented by Meerai Choi, and she is alleged to have given the funds held in her law firm’s trust account directly to the original developer, Joseph Lee, who is now allegedly back in Korea.
I say “allegedly” because these comments on the forum are not factual, and we know that not everything on the Internet is true.
But the issue of the trust account breach is a serious one.
I tell my clients when they hand me a cheque for $50,000, “Don’t worry, this money is being held in the brokerage’s trust account; every brokerage has one. The cheque is made payable to “XYZ Realty Inc. Brokerage, In Trust,” not “Bob Smith” the seller.”
The reason that law firms and real estate brokerages have trust accounts is for reasons exactly like what is being alleged above: that the seller or developer takes the funds and absconds with the money.
If that money is really over in Korea right now, it’s never coming back.
Perhaps TARION can cover a portion of the losses, but I think many of these investors are out of luck.
It’s a terrible story, and to be honest, I think this is just the beginning. I wouldn’t be surprised to see a feature in a newspaper in the coming months, and a very, very unhappy ending…