Ontario Real Estate Developer Pursues Millions in Damages from Defaulting Pre-Con Buyers
Ontario-based real estate developer Coco Developments Ltd. has initiated a wave of lawsuits against 26 buyers of preconstruction homes in the River Ridge Estates project, located in Lakeshore, Ontario. The legal actions, starting from November 2022, target buyers who allegedly defaulted on their purchases, failing to close and complete transactions as initially agreed in the late summer and fall of 2021.
The court documents reveal that most of the buyers are from the Toronto area, rather than being local to Windsor. The lawsuits highlight a growing issue within the new-build home market, where a combination of rising interest rates, inflated home prices, and financial instability have left many buyers unable to finalize their purchases.
Mark Morris, a real estate lawyer with Legalclosing.ca, noted that this trend is becoming increasingly systemic. “Builders that are facing five or six failed closings are turning to their only recourse, to see if, in fact, there’s any money in ‘them thar hills,'” Morris stated.
The damages sought by Coco Developments start with the $40,000 deposits placed by buyers for homes priced between $850,000 and $970,000. However, the final damages could be significantly higher, as buyers may be required to pay the difference between their original purchase price and the ultimate selling price if Coco can resell the homes.
“You don’t just lose your deposit if you walk away from any real estate deal – you can lose everything,” warned David Feld, a real estate lawyer with Feld Kalia Professional Corp.
One notable case involves Balkar Singh Dhanju, who signed a contract in September 2021 to purchase a five-bedroom house at 395 Cypress Lane for $853,757. He later informed Coco Developments in November 2022 that he could not close the deal. The property is currently listed for $759,000, significantly lower than Dhanju’s original purchase price. The damages Coco could seek from Dhanju include the almost $100,000 price gap and any carrying costs associated with the vacant home.
Other buyers, such as Shazia Sabir and the elderly couple Jasbir Singh Kapoor and Lavinder Kaur Kapoor, have cited personal and financial hardships as reasons for their inability to close their deals. Sabir claims her closing funds were stolen, while the Kapoors allege health issues and financial strain led to their default.
According to property records, many homes in the River Ridge Estates project remain unsold, with some listings active for over four months. Real estate experts like Joyce Blackmere, director of sales at Dan Gemus Real Estate Team Ltd., have noted a significant drop in home prices in Windsor. The average home price in Windsor was $550,000 in 2023, a stark contrast to the higher prices seen in new-build projects.
READ: The Rise and Fall of Bridging Finance
The broader implications of these lawsuits underscore the volatile nature of the real estate market, particularly for new-build homes. Rising interest rates have significantly impacted buyers’ ability to secure mortgages, leading to increased defaults and legal battles. Real estate lawyer Morris noted that some developers are willing to work with buyers to avoid litigation, employing strategies like vendor-take-back mortgages or assisting with assignment sales, but this is only feasible if the developers have sufficient financial reserves.
Jenny Coco, the owner of Coco Developments, is herself embroiled in financial difficulties related to the insolvency of builder Sam Mizrahi’s The One, a major condominium project in Toronto. She is also a defendant in litigation surrounding the collapse of Bridging Finance Inc.
Information for this briefing was found via The Globe And Mail and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
She’s nothing but a scam artist.. her turn will be coming very soon.. I hope they ruin that family just like they ruined everyone else… NOTHING BUT THIEFS…..