Downtown Toronto Trump Building Renamed

June 28th, 2017 · Kids & Family

So there’s a good chance most of you have not been following the nightmare that Trump Tower was to investors. My understanding is that the promised returns were exaggerated and expenses understated.  Not really a surprise, but investors were misled. You might also say, they were bled dry, because a lot of them didn’t or couldn’t close.

Then the developer Talon defaulted on it’s loans.

Not surprisingly it seems like the Trump brand is waning at least in Canada and the building which is supposed to be a posh hotel, attracted protesters of all kinds even though Trump just plastered his name on it and manages the hotel. He doesn’t own the building.

Then the new owners of the hotel, paid Trump 6 million ?? to take his name off the building, which all things considered is a fantastic deal.

This whole development story is something else. Anyhow hopefully now the new buyer can hopefully turn this building into a going concern.

Bye Felicia.

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Harmony Village Sheppard Site in Limbo As Fortress Appeals The Sale Of The Property

June 26th, 2017 · Property Management

A few people seem to think that Fortress has financial problems and can’t follow through and close deals and build buildings.

Show me the money for St Regis development.

Sky City Center Development Investors Not Getting Paid.

The following quotes are sourced from the bankruptcy filings of the Harmony Village Developments.

Stalking Horse Bid was predicated upon Fortress assuming the Debtor’s agreements of purchase and sale with the Purchasers. It was also,in part,a credit bid. Although DSFI was to have been paid in full on closing, the purchaser was to have assumed the existing debt secured under the second and third charges.

On the afternoon of April 6, 2017, the Receiver was advised that Fortress would not complete the purchase of the Property pursuant to the Stalking Horse Bid, as it no longer wished to assume the Purchasers’ agreements of purchase and sale.

    As such, the Receiver reported that as a next step it would contact those parties who had expressed an interest in the Property during the Stalking Horse Process to invite them to submit offers.

The deposit paid by Fortress thereunder of $350,000 forfeited to the Receiver.

Receiver Actually Refers to “Lift”

Fortress planned to assign its rights under the Stalking Horse Bid to a builder/developer with whom the Receiver had not had prior dealings. Upon learning of this, the Receiver obtained assurance from counsel to Fortress that the assignment would not result in Fortress receiving a financial “lift” that would otherwise flow into the Debtor’s estate if the Property were sold directly to the assignee.

It seems like the receiver is concerned that Fortress is trying to make money as the middleman in the transaction between the Receiver and the Buyer.

Put On Your Big Boy Pants

Given Fortress’s repudiation of the Stalking Horse Bid and its prior plan to assign its rights as purchaser (which suggested that Fortress’s control over completing a transaction may be limited), the Receiver, through its counsel, advised Fortress’s counsel that a substantially larger deposit, in the range of 10% of the purchase price for the Property, would be required and the Receiver would need to be satisfied of Fortress’s financial ability to close.

Boom

In the email, the Receiver’s request for an increased deposit was rejected.

Boom Boom

On April 20, 2017, the Receiver was notified that Fortress’s first mortgage financing commitment to purchase the Property had expired.

On April 24 and 25, 2017, counsel for Fortress and the Receiver exchanged emails in which it became apparent that Fortress did not have the requisite financing in place.

On April 27, 2017, the Receiver’s counsel again requested evidence of Fortress’s financial ability to complete the Fortress Offer. No such evidence was provided to the Receiver.

Another Offer Appears

Fortress wrote a letter to the Receiver accusing them of malfeasance because the buyer decided to cut them out of the deal. So this is the Receiver’s reply.

The Receiver vigorously denies your allegations that it has acted in a manner which is inappropriate. There is no existing contract between the Receiver and your client. Following your client’s termination of the Stalking Horse Bid, the Receiver informed the Court and all stakeholders at it would continue marketing the property for sale.

In re-marketing the property, the Receiver has not breached any of its duties. The Receiver has been taking reasonable steps to market the property to all potential purchasers. Your client’s second offer, which was submitted following its repudiation of the stalking horse bid, has not been accepted by the Receiver and the Receiver is at liberty to continue marketing the property for sale.

Len Gangbar counsel for (redacted) contacted David Preger on an unsolicited basis and advised that (redacted) was making an offer on its own. Mr. Preger suggested that (redacted) work with Fortress.

The Receiver, through its counsel, has repeatedly informed you that it requires your client to provide evidence of its ability to close a sale transaction. Notwithstanding those requests, the Receiver has not been provided with evidence of your client’s financial ability to close.

The Receiver has continued to market the property, as it disclosed it would and would have been breaching its duty if it had not. The Receiver was and is prepared to consider all offers submitted.

The Sale is Approved

No one knows what the final purchase price is, we only know that the sale amount from the Developer (Pinnacle) is less than the existing mortgages on the property. How much is not yet revealed. No one knows except the receiver and the courts what the losses are.

The Sale is Appealed

Then Fortress decided to appeal the sale. Ok then.

The learned motion’s judge made palpable and overriding errors of fact and law resulting in the occurrence of a substantial wrong or miscarriage of justice.

The learned motion’s judge erred in accepting that the Receiver’s recommendation that offer to purchase the Property from Pinnacle International Sheppard Lands Inc. (“Pinnacle Offer”) be approved as it was the best offer to purchase the Property from the point of view of the majority of stakeholders.

Sorrenti, as trustee for the investors in the syndicated third mortgagee, will incur a loss in excess of $10,000 should the Property be sold to Pinnacle pursuant to the Vesting Order. If the Sorrenti Motion had been granted and the Fortress Offer accepted, the investors in the syndicated third mortgagee would not incur a loss on the sale of the Property.

So there you have it, the appeal.

More to come…

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Harmony Village Sheppard Project Defaults on Pre-Construction Buyers

June 26th, 2017 · Property Management

The project is bankrupt and in spite of having received millions of financing there’s no sign of it on the site, which is still a parking lot with a hole or two dug in it and some piles of contaminated dirt lining the back of the property.

None of the developers who could have bought the bankrupt site, wanted the original purchasers of the site from 2011. Which begs the question, why wasn’t the building built as soon as the buyers were in place.

Bottom line is the buyers got screwed by putting down payments on the project and the builder just failing to build. We don’t need too many more of these failures, to wind up with a very disillusioned buyer pool and there have been a number of these kind of failures. See developers do not give a shit about buyers, and with these kinds of appreciation it’s just simply more profitable to throw your original buyers under the bus, give them their money back and move on.

The problem with this type of behavior is it eventually comes back to haunt the industry because these types of abuses invite new regulations. Just ask the landlords how they like their new 1.8% rent increase for 2018.

Just this year, we’ve had Urbancorp go bankrupt, Mimmico on the Go, and now Harmony Village Sheppard.

Consumer Confidence Will Suffer

 

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Can’t Sell Your House? Rent It Out

June 23rd, 2017 · Personal House, Property Management

Since I have been in business (10 years now) I slowly steadily chug along, adding a few property management properties to our portfolio, renting a few more, keep on top of things in a pretty unexciting way. Property management done properly should be totally boring.

From January this year, owners who had been clients for years just decided to sell. I even asked why they were selling out of curiosity and it just seemed that they thought it was high prices and that’s it. Vague. Even the strip mall I manage was sold. I was panicking a little bit, in 10 years it has never happened that I lost more clients over 6 months than I gained. In fact it’s kind of rare for people to move or change managers at all. This new development was a little frightening.

Enter My Saviours

Recently I’m having new phone calls, I can’t sell my house, can you rent it? Yesterday it was a potential client from Vancouver, no offers on his house in Toronto, he’s relocated for work. Can I help? They’re going to give it a few more weeks on the market and then they’ll rent/manage.

I’m already renting a house that didn’t sell in Oshawa.

That’s been the problem with housing traditionally, it’s not very liquid, and we’ve all been a little spoiled by the GTA market that has houses sold on multiple offers in a week after holding back offers.

I’m also currently managing a lot of houses for people who have to leave the country, and will eventually need their houses back.  They could sell but don’t want to.

Those trying to sell their houses and not being able to… that’s really new.

The only problem is that in this rental market, you can’t generally cover your expenses with the rent on a house or condo. If you rent a million $ house you’ll get a bit more than $2000 per month depending on the area, time of year, quality of house etc. Unfortunately the upper level of rents is determined by what people make in their jobs, and that has not changed to follow the housing market.

If  you can’t sell your house,  we can rent it.

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Have You Been Ripped Off By Home Capital Group?

June 23rd, 2017 · Mortgages

Home Capital, Home Trust and Re-Charge and their companies may have overcharged their former customers. I have proof that this has happened to at least one person. I have reason to believe that this is common practice for them. If you have been overcharged, ripped off, foreclosed or power of sale by Home Capital Group or any of their affiliates, I would love to see your paperwork. The goal is to get your money back.

Over Charging

Home Trust takes advantage of people who are in financial difficulty but have equity in their home to charge fees that are contrary to the Interest Act. Here’s a case that goes into some detail about what charges are and aren’t allowed. Basically if it’s not interest, it’s not allowed unless it’s a reimbursement for actual costs that are reasonable and can be accounted for.

Examples of Overcharges

  • late fees
  • escalation clauses
  • NSF fees over $50
  • home insurance administration fees
  • home insurance premium
  • unsubstantiated legal fees
  • appraisal or inspection fees
  • pre-payment compensation
  • interest on open items
  • etc.

The goal is to get a few people together, and start a class action lawsuit (you don’t have to pay upfront for the lawyer) to get your money back and stop them from doing it to anyone else. Here’s a sample of some of the overcharges I have seen on my friend’s statement. Anonymised Home Trust Company (This is just one example ) I’m sure there are some very creative over charges out there.

You may not even know you’ve been stolen from, losing your home is extremely stressful, and you may not have been looking properly at your papers or known what was and wasn’t allowed. Oftentimes people don’t have a choice but to pay, because otherwise they can’t switch mortgages. The end result is years of higher and excessive payments on their new mortgage.

According to the evidence I have seen, Home Capital Group is operating their bank using Excel spreadsheets and word templates. They seem to have no central accounting system. The problem with that, is they have basically no control. Furthermore they don’t seem to save documents they issue to their clients, and I have seen multiple documents supposedly issued on the same day, with different amounts and different totals. Needless to say this a problem when you are a bank. In fact my little property management company has better internal systems than Home Trust. That’s frightening.

People who have asked them for an accounting of how much they are owed, have gotten a variety of responses and it differs from day to day. The bottom line is a lot of mistakes are made and because they are dealing with people’s homes it can cause serious and long term side effects.

If you disagree with their accounting and you don’t pay, you have to either hire a lawyer $$$, or the charge will be put on your credit report. Obviously this makes it even harder for their customers to get better mortgage terms elsewhere.

Earlier today it came out that one of Warren Buffet’s companies has decided to lend them money and buy shares. This is excellent news because now their overcharged customers will be able to sue to get their money back.

So if you’ve been overcharged and abused by Home Trust/Home Capital Group, now is the time to fight for what’s right. Please email me directly at Rachelle@landlordrescue.ca or call me at 416-880-4126 to talk.

Many Thanks

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