Markham condo buyers sue developer over last-minute charges

A group of Markham condo buyers has filed a class-action lawsuit against a developer for allegedly piling on thousands of dollars in what they call unfair and last-minute charges.

A statement of claim was filed against The Remington Group — the key financial backer and developer named in Markham’s ambitious NHL-size arena plan — and its alleged subsidiary companies on behalf of condo buyers in Remington’s 95-hectare mixed-used development in downtown Markham.

According to the claim, which seeks more than $5 million in damages, the buyers were hit with about $3,000 each in “increased development charges” as closing day approached, a last-minute demand that saw many pay undue fees.

“At that time, we had no choice. We didn’t question it,” said Samir Sa’d, a 69-year-old retiree who said he was surprised to discover thousands of extra dollars in development charges when he was buying a one-bedroom condo in Remington’s Rouge Bijou Terraces in 2006.

The Remington Group and its alleged subsidiaries, Rouge Residences I Inc. and Rouge Residences II Inc., filed a notice of intent to defend the claim with the Ontario Superior Court of Justice on Sept. 28, 2011. “The defendants intend to defend this action,” it said.

More than a year later, the lawyer representing Remington condo buyers said the parties are nearing a settlement out of court.

“We are negotiating,” said lawyer Sean Grayson with Roy Elliott O’Connor LLP. “I’m hopeful we will come to a settlement relatively quickly . . . within the next couple of weeks.”

Neither Remington Group nor the company’s lawyer responded to repeated requests for comment.

The class-action suit has come to light over the past few months as news emerged of Remington’s involvement in Markham’s proposed arena deal. At a recent public meeting, residents brought up the lawsuit and spoke about their experience of living in one of Remington’s first developments in the city’s highly-touted downtown.

According to Sa’d, the only plaintiff named in the class-action suit, he and another buyer began to investigate the adjusted charges on their condo agreements and, after discovering “red flags,” decided to pursue legal action.

The suit contends that one of Remington Group’s subsidiary companies prepaid the development charges — a government fee that goes toward anything from parks to sanitation systems to education levies — as a way to avoid increased rates over time.

When it came to closing day, the suit adds, buyers were charged the closing-day rate, which had increased from the earlier prepayment fee. According to the statement of claim, the developer paid roughly $300 for each unit, but charged buyers around $3,000 when closing dates arrived.

While the purchase and sale agreement notes that fees may increase to compensate for rising municipal levies or development charges, the claim states the developer had no right to jack up the charges given that the increase was not required by the City of Markham.

“It is a convention in the real estate industry that purchasers are only to pay for the development charges that were incurred by the developer,” the claim notes. “The payment is an unjust enrichment.”

According to Jim Baird, Markham’s commissioner of development services, the municipality sets the development fee based on infrastructure needs in the area. He said he couldn’t speak further about the lawsuit as the city is not involved.

In a separate case three years ago, two Remington condo buyers took the developer to small claims court after they had allegedly been charged an extra $7,680 to $11,283 for levy increases. In early 2011, the judge ruled in favour of the buyers and ordered Remington Group to repay the levy increases as well as interest and legal costs.

Two months after the ruling, however, Remington Group filed an appeal and the parties later settled out of court for an undisclosed amount. Toronto lawyer Michael Carlson, who represented both condo owners on the appeals, said he could not discuss details of the settlement.

While the outcome is unknown, the case prompted an amendment to the Ontario New Home Warranties Plan Act in January 2011 that prevents developers from charging price adjustments unless they pay the amount to the third party, which in this case would be the City of Markham.

As a result of the regulation change, the scope of the current class-action suit against Remington Group has been limited to condominium developments with closing dates before 2011.

Sa’d, still waiting to hear whether the added charges for his Rouge Bijou Terraces unit will be recouped, said he hoped for a favourable outcome not just for the money, but as a matter of principle.

“It’s not a money issue,” he said. “It’s unethical . . . they should not take advantage of the little guy.”

Source: Toronto Star