The Globe and Mail - 03.04.2020

H2 | REAL ESTATE O THE GLOBE AND MAIL| FRIDAY,APRIL3,2020

A

controversial proposal to
sell an entire Hamilton
condominium building
has been delayed amid concerns
that a meeting of the owners to
settle the matter would have vio-
lated provincial social-isolation
orders.
The delay is just the latest twist
in a saga first reported in The
Globe and Mail in February, that
has pitted neighbour against
neighbour and launched accusa-
tions of pressure tactics and
threats amid a looming mainte-
nance bill that runs into the mil-
lions of dollars.
Dr. Joy Ogunro, who lived in
the building from 1986 with her
mother (and inherited the unit
when her mother died in 2017,
but now lives in Barbados) says
she has been suspicious of the
plan and methods used to at-
tempt to sell the building from
the beginning. “All of these ac-
tions appear not to be in the in-
terest of the owners,” she said.
“What is the rush?”
In November, the three-person
board of the 12 condo apartments
at 35-43 Duke St., a row of heritage
townhouses known as Sandyford
Place, listed the downtown Ha-
milton building for sale on MLS
with an asking price of $4.9-mil-
lion. According to sales docu-
ments The Globe has reviewed,
by December a tentative agree-
ment of purchase and sale was
struck with FortinoBros Holding
Inc, a developer of boutique heri-
tage condominium projects in
Hamilton run by brothers Jordan
and Eugenio Fortino. The sale
price of $3.7-million would value
each of the units at approximate-
ly $308,000, but the dissolution
of the condo corporation would
also mean the distribution of the
reserve fund to members. A July,
2019, reserve fund study shows
the fund stands at more than
$460,000, which might add an-
other $38,000 to unit owners.
That study also shows the need
for a $2.85-million special assess-
ment for repairs to everything
from stonework to a steel balco-
ny. Owners are legally on the
hook to pay for reserve fund stud-
ies and the first bills for the
Sandyford owners – which could
be as much as $20,000 a month

until each owner pays more than $200,000 into the fund – are scheduled to begin going out on April 1. Dr. Ogunro disputes whether the board had any right to list the building for sale without consult- ing the owners. She also says she wasn’t informed of the deal to buy the building, struck in De- cember, until Feb. 11, after The Globe published its first story. Dr. Ogunro said that a May, 2019, appraisal – which suggested a value of $1.75-million if the site were a vacant residential devel- opment site using 2018 compara- ble sales – was not shared with her until March. She compared the process as being less stringent than one would expect in a di- vorce proceeding, where both parties might obtain their own appraisals and jointly participate in the sale of property. “We’re all married together in a condominium,” she said. “We do not know what other offers were presented or if these are the highest or best offers.”

The process the board is pursu- ing is known as section 124 of the Condominium Act, which allows for a corporation to dissolve itself and distribute the proceeds of a sale of all the units and the land the building sits on. It requires that 80 per cent of the owners agree to the sale and also that 80 per cent of any lenders or other stakeholders agree also. On March 21, owners received a notice to attend a meeting at 2 p.m. on April 5 in the building’s rear parking lot for a vote (to be recorded by a show of hands) on the plan to sell the building and dissolve Wentworth Condomini- um Corporation Number 96, which manages it. Days later, on March 24, the province declared a state of emergency to deal with the coronavirus pandemic, limit- ing public gatherings of more than 50 people. By March 28, the province banned meetings larger than five people excepting only funerals and services for first re- sponders. Dr. Ogunro took part in a

March 24 conference call between the individual condo owners in which she said one faction threat- ened to withhold their fees if the purchase deal was not supported. In the call, one owner, Christoph- er Moore, said he represented seven other owners – including condo board president Sam Nash and board member Chris Krnjeta

in backing the sale.
“Christopher Moore, made the
declaration,” Dr. Ogunro said. “If
the sale was not accepted seven
owners would not pay another
red cent towards the common
elements of the building.”
Mr. Moore did not respond to
requests for comment, but in a
follow-up email to owners he
wrote: “If everyone is considerate
... we could all accept the $3.7-
million offer without dissent and
each get our fair share. If we don’t
get 80 per cent or more on the
vote, it’s going to get ugly very
quickly. And the end result will be
that we sell anyway under court
order – and we’ll all end up with
much less.”

The remaining condo board member, Anna Procwat (who owns two units in the building with her husband, with a third unit owned by her brother) was not included in the group of seven. Lawyer Denise Lash, of Lash Condo Law, said condo board directors face considerable financial threat in such matters. “There’s tremendous personal liability for the directors,” for re- fusing to collect fees the corporation needs, she said. “If you don’t collect it, and you don’t secure it, the board member could be per- sonally liable.” Any owner who stops paying fees can be subject to a lien on the title of their unit, failure to pay that lien could result in the power of sale of their units. According to Ms. Lash, if the board majority does not direct corporate counsel to file liens against delinquent unit holders, any owner in the corporation could apply to the Condominium Authority of Ontario for an ad- ministrator to take over the man- agement of the building. “It is going to be messy if we don’t agree to this,” said John Clinton, one of the seven owners who agreed to the fee hold back. “It feels like putting a gun to your own head, because we can’t see another option. Could anything be more catastrophic than blow- ing your own [financial] brains out?” “If we don’t sell this [building] the prospects of moving forward are so dire for us ... it’s an astron- omical amount of money,” Mr. Clinton said. “I don’t have the money myself, this is my last day of employment; I retire today.” The board agreed on Monday to delay the meeting by 30 to 45 days, said Patrick Greco, corporate counsel for the condominium corporation and a lawyer with Shibley Righton LLP. The delay doesn’t solve the problem of the special assessment payments and it may exacerbate the ten- sions over the sale. “If this sale, which the board believes to be one of, if not the last chance, falls through, they’ve got to move ahead and start col- lecting the money,” Mr. Greco said. “The problem is there may be owners who simply don’t have access to those funds. I’ve never dealt with a board or person that were this deep in arrears. These owners are in fairly extenuating circumstances.”

PotentialsaleofHamiltoncondoonholdovercoronavirusrestrictions

SHANEDINGMAN
REAL ESTATE REPORTER
TORONTO

THELISTING

Theownersofthe12condounitsasSandyfordPlaceinHamiltonareinadisagreementaboutsellingthe propertytoadeveloperfor$3.7-million.GLENNLOWSOM/THEGLOBEANDMAIL

A

stillness has descended on
the real estate market of
Toronto and surrounding
areas as citizens confront the CO-
VID-19 pandemic.
The Ontario Real Estate Associ-
ation, the Toronto Real Estate
Board and the Real Estate Council
of Ontario have all sent missives
to agents with recommendations
on how to navigate the health
crisis.
The message from the over-
seers is blunt: Ontario remains
under a state of emergency, and
while the provincialgovernment
deemed most of the real estate
industry “essential,” it did so in
order to permit transactions to
close – not to allow the industry
to carry on with business as usu-
al.
Agents are allowed to take on
new listings in the event an own-
er has a need to sell. But digital
technology is largely replacing in-
person meetings and showings.
Preparing properties for sale and
the limited number of showings
follow strict safely protocols.
Andre Kutyan, a real estate
agent with Harvey Kalles Real Es-
tate Ltd., says sales volumes have
been on a steady slide.
He analyzed transactions in a
swath of central Toronto and
found that there have been 29
firm deals in the past seven days.
In the preceding seven days,
there were 60 transactions and in
the week before that, 120.
Looking back several weeks re-
veals the same trend, says Mr. Ku-
tyan, who has suspended some

listings and postponed others. But he has listed three properties in the past week because the owners, for various reasons, need to sell. “The reality is that people are not listing unless they have to,” he says. He has received a few angry texts and calls from agents who argue that all business should be suspended, Mr. Kutyan acknowl- edges, but his position is that he has a duty to clients who can’t hold off. A detached house in the Allen- by area, a semi-detached house in Bedford Park and a one-bedroom condo unit also in Bedford Park have all attracted potential buyers, Mr. Kutyan says. Mr. Kutyan, who favours the strategy of setting an asking price below market value and holding off offers to a set date and time, says some potential buyers have tried to jump the line with a bully offer. “I’ve had pre-emptive offers on every single one,” he says. Some house hunters need to buy because they’ve sold another property or given notice that they’re ending a lease, he says. Others are opportunistic. “I think there are guys out there who want to snag a deal.” Mr. Kutyan prequalifies poten-

tial buyers and has frank discus- sions with them about a realistic selling price. He provides previews of the property via technology and fol- lows all of the protocols for phys- ical distancing and other safety precautions at the rare showings he does in person.

Harvey Kalles Real Estate is one of the brokerages participa- ting in the growing practice of re- quiring buyers, sellers and service providers to acknowledge the risks to personal health that arise from showing and visiting the property during the pandemic. The electronic forms contain an indemnity agreement that seeks to shield the brokerage and its employees from claims arising

from a visit to the premises. Mr. Kutyan says such waivers are becoming more common. John Lusink, president of Right at Home Realty Inc., says his firm has closed all 12 of its branches to face-to-face business. The firm, which operates in the Greater Toronto Area, Barrie and Ottawa, is completing deals already in the works but is follow- ing recommendations to delay new listings if possible. “If people don’t have to sell, the message is ‘hold off if you can.’” Mr. Lusink says some clients have already sold their existing house and need to buy another one or vice versa. Showings have been dropping daily and sales are on a steady downward slope, he says. Deals have been taking place and some properties with offer dates are still seeing competition. But where there might have been nine or 10 bidders in recent weeks, it’s now more common to see one or two. But owners who need to sell are still able to strike deals. “Fortunately there is still so much pent-up demand.” Mr. Lusink expects the slump in listings and transactions to become more pronounced in April. He notes, however, that 2019 also had a particularly quiet spring market. In early summer, it began to pick up. He says that could happen again this year, with an upturn in June or July, but only if the fears surrounding the coronavirus have passed. Listings were already slim before the crisis and that trend could continue. But while that’s the optimistic view, Mr. Lusink is not ruling out the risk that the widespread lay- offs and job losses in the business community could lead to a down- turn in the market. In the fall of 2008, the global financial crisis prompted buyers to hit the pause button almost overnight. But after a few months, credit flowed again and the real estate market in Canada picked up strongly.

Different forces are at work this time. So far he hasn’t seen that kind of shift in buyer sentiment, Mr. Lusink says, but he worries about a hit to the country’s economy. “I think this is different. I think it will be a longer-term recession,” he says. “As people get laid off, that’s a different kind of financial crisis. They won’t qualify for a mortgage.” Mr. Lusink is also keeping an eye on sales agreements that have been signed in recent weeks but have not yet closed. He expects banks and other lenders to scrutinize deals care- fully. If they become concerned about the security of the buyer’s income, the lender may not be willing to provide a mortgage, he says. Things also get tricky for high- ly indebted consumers who have purchased a new home but then run into trouble if they can’t sell their existing one or an agreement falls apart. “Not many buyers can hold two mortgages or qualify for a bridge loan,” Mr. Lusink says. Duncan Fremlin, a real estate agent with Re/Max Hallmark Re- alty Ltd., is informing his clients that a recent snapshot of the market showed listings rising as sales dropped. The number of sales above the asking price also de- clined during that window. Mr. Fremlin predicts that trend will continue. Some people won- der if the dynamic makes this a goodtime to buy, the veteran agent says, but he is urging cau- tion. It’s too soon to be able to offer a reliable outlook, he says, but he notes that in the recession of 1990, the real estate business ground to a halt. “For the first time in decades in Toronto, selling a house in a good neighbourhood within a reasonable period of time is not a given. The risk factor is high,” he says. Mr. Fremlin adds a grim warn- ing: “With so much uncertainty in the world, the bank appraisals may not match what the buyer paid.”

QuietfallsoverToronto-arearealestate

Somehousehunters

stillneedtobuy,having

alreadysoldanother

property.Othersare

opportunistic,agentsays

CAROLYN
IRELAND

NEXTMOVE

TORONTO

Becauseofthecoronavirus,manyrealestateagenciesarewindingthings down,onlysellinghomesiftheywerealreadyonthemarketor becauseanownerhastosell.DEBORAHBAIC/THEGLOBEANDMAIL

For the first time in decades in Toronto, selling a house in a good neighbourhood within a reasonable period of time is not a given. The risk factor is high.

DUNCANFREMLIN REALTOR

The Globe and Mail - 03.04.2020

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