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June 9th, 2011

Homebuyers ‘felt pressure’ to buy

Posted by Joan McGuigan
  • Article rank
  • 8 Jun 2011
  • The Gazette
  • AllISON lAMpErT
  • THE GAZETTE
  • Kathy Vinueza and her husband were looking to buy a more spacious home for their growing family when they saw plans for a new townhouse project on Marc Chagall Ave. They became enamoured with a three-bedroom corner unit featuring a spacious kitchen with granite countertops, a finished basement for Vinueza’s 19-year-old son and a small backyard for their two dogs.

    Plans for a new townhouse project on Marc Chagall Ave. claimed only 21 townhouses were available and the $333,000 price was low for a home within walking distance of the mall.

    Like other buyers, Vinueza said she felt the sales process was rushed but the developer, Jerome Winikoff, was working with a reputable architect and had already secured the requisite residential zoning change from Côte St. Luc. Plus, there were only 21 townhouses available and the $333,000 price was low for a home within walking distance of the mall, a park and city hall.

    “You felt pressure (to buy),” she recalled of the contract she signed in 2009

    “But we saw the plan and the little model house. It looked very professional. “I never expected it would become such a headache.”

    rOBert J. GAlBrAith The GazeTTe
    The 60,000-square-foot site where the townhouse condos were supposed to be completed in late 2010 is empty. Some buyers say they’re still baffled that Winikoff’s company – which had no valid licence to build and sell townho

    Vinueza along with at least eight other buyers have put down deposits worth between $7,000 and $15,000 on the houses, The Gazette has learned.

    While two had their deposits refunded, most are still waiting for their money.

    The 60,000-square-foot site where the townhouse condos were supposed to be completed in late 2010 is empty; the billboard that once advertised “Marc Chagall Townhouses – only two units left” is toppled over on the grass.

    Lawsuits are piling up for the return of the deposits that, according to court papers in a separate case filed by Winikoff, amount to almost $259,000 and were spent on everything from notarial fees to “costs for clearing the land.”

    Many of the buyers contacted by The Gazette said they’re still baffled that Winikoff ’s company – which had no valid licence to build and sell townhouses – was able to obtain a zoning change from the city, and the right to sell homes and even cut down trees on land it didn’t own.

    “How can you give permission to someone to put up a sign and park a trailer and cut down trees if they don’t even have a valid licence?” asked Vinueza, who said she’s out nearly $15,000.

    “The city doesn’t give permission to just anyone.”

    It’s a question that raises important warnings for buyers of new construction at a time when Greater Montreal has become the area with the third-highest number of housing starts/permits in North America, according to RealNet Canada data. With the construction frenzy, even developers have noticed that buyers are forgoing once routine prudent practices like researching a builder’s credentials, or depositing money with a notary, with the funds to be released at different stages of construction.

    Indeed some of the townhouse buyers – which include a lawyer, reporters and a real estate broker – made their cheques out directly to Winikoff ’s numbered company, 4435176 Canada Inc.

    “It is very regrettable,” said Côte St. Luc Mayor Anthony Housefather. “(But) if they sign a contract with a private developer, the city is not involved with them. Is it the city’s fault that people didn’t secure proper legal advice?

    “It sounds like Winikoff ’s contracts provided for things to happen that were very unusual.”

    Winikoff, who refused to answer The Gazette’s questions when contacted by phone, first secured an option to buy the land for $1.4 million in 2007, court documents show. The site, located across the street from Bialik High School, was the last remaining sliver of a 3-millionsquare-foot parcel of land bought years ago by prominent developer Andrew Gaty.

    In securing the option, Winikoff was doing something very typical; in real estate, it’s routine for developers to sell homes on land they don’t own.

    Having an option to buy for a certain period of time allows developers to avoid being stuck with unwanted land in the event a crucial zoning change can’t be obtained, or a project isn’t viable.

    Buyers are informed early on that a seller can cancel a project by a certain date without penalty if sales are poor, for example.

    What’s less common is the way Winikoff does business, court records, interviews with buyers and sales contracts obtained by The Gazette show.

    In 2007, the Montreal businessman and his family were ordered by a Superior Court judge to pay nearly $500,000 to a trustee following the 2000 bankruptcy of his former company Oblin Homes Inc. The trustee wanted financial compensation stemming from Winikoff ’s 1999 decision to sell three Westmount condos built by Oblin to family members for below market value.

    In an interview with The Gazette, Côte St. Luc landowner Gaty said he agreed to sell the land to Winikoff because of the credibility of his associates, the architectural firm Rubin and Rotman. A member of the firm signed the promise to purchase, Gaty said.

    When contacted by The Gazette, architect Stephen Rotman wouldn’t confirm or deny that he was initially involved in the purchase of the land, instead referring a reporter to Winikoff. Subsequent calls to Rotman seeking clarification weren’t returned.

    News reports, however, show that in 2008, Winikoff and Rotman together presented the townhouse project at a meeting with Côte St. Luc city councillor Mike Cohen and his constituents.

    Eventually Winikoff was able to obtain the requisite zoning change from commercial to residential; with the nearby Cavendish Mall downsizing its retailing component, the developer’s original plan of building a strip mall on the site was no longer a viable option.

    In 2009, the city allowed Winikoff to set up a trailer on the land and sell units for the project, because he had Gaty’s permission, Cohen said. The developer still hadn’t purchased the property.

    “It wasn’t a priority for us to sell this land,” said Gaty, 84, who built Montreal’s Olympic Village with developer René Lépine and other partners. “We didn’t mind giving him extensions.”

    When Winikoff ’s company was unable to secure financing for his next plan to sell co-ops, he decided to change the project to condos instead. In the sales trailer parked on the site, prospective buyers said they were given folders with pictures of the project – brick townhouses with white gable ends surrounding a well-manicured courtyard.

    The project also got a boost when word spread that townhouses would be built just a few blocks away by the Cavendish Mall for around $500,000 – over $150,000 more than Winikoff ’s prices, buyers said.

    Yet when they signed their contracts, buyers were making a deal with a company that didn’t have a licence from the Régie du Bâtiment du Québec to build new homes, as is required. The numbered company registered to Winikoff also wasn’t accredited to offer a new home guarantee program, a type of insurance for buyers of homes up to four-storeys high that is required by the Régie.

    Yet those contracts were prepared on forms containing a logo for the new home guarantee program offered by the Association provinciale des constructeurs d’habitations du Québec (APCHQ). The APCHQ has sent a mise en demeure to Winikoff ordering him to stop using the forms.

    Vinueza’s contract also had an another unusual feature.

    Documents handed out to buyers initially, when the project was still a co-op. said the deposits would be held in trust by notary Sandor Steinberg “until such time as construction is started.” Yet in the actual contract, buyers like Vinueza who asked for the money to be held by the notary in trust were to have their deposits released when “the trees (from the site) are cleared.”

    Steinberg would not comment on the case without permission from the buyers and Winikoff.

    While Winikoff was unable to obtain a building permit because he did not own the land, he got a permit with Gaty’s permission to remove the trees, Housefather said.

    By spring 2010, buyers were no longer convinced that construction was imminent. At least a handful sought answers from Côte St. Luc’s urban planning department and city councillor Cohen.

    “I think as a city we did what we would do with any developer – we make sure they follow the rules,” Cohen said. “We continuously waited for the purchase to take place.”

    Both Cohen and Housefather said it’s not Côte St. Luc’s job to investigate the credentials of every developer who applies for a zoning change.

    Winikoff always followed city bylaws.

    “I don’t see how the city could have done things any differently than we did,” Housefather adds. “What should we have done, put a sign on top of Winikoff ’s sign saying ‘He doesn’t own the land’? ”

    By the spring of 2011, four years after the initial offer to purchase, Gaty said he and his partner grew tired of the delays.

    “We gave him one extension after another, but then it became clear that he could not secure financing,” Gaty said.

    Winikoff is now suing companies owned by Gaty and his partner Harry Glassman, alleging that the two landowners reneged on a financing deal that would have allowed him to buy the land.

    Gaty dismissed Winikoff ’s court case as “a figment of his imagination.”

    Gaty and his partner have since sold the land to Côte St. Luc businessman Gerald Issenman who plans to develop a similar townhouse project for $425,000 and over a home. It took Issenman, president of Côte St. Luc Building Corp., and his partners less than three months to buy the land, Gaty said.

    As for Vinueza and her husband, they have found a new home with a large backyard in Ville St. Pierre. This time though, they put down only a small deposit and thoroughly checked the developer’s credentials.

    There are no granite countertops in the kitchen, even though the home costs over $100,000 more than Winikoff ’s project.

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