Would-be buyers who have waited years to move into Murrayville House were dealt a defeat by a B.C. Supreme Court judge on Wednesday.
At least 40 units of the troubled Murrayville House condo project will be sold at market rates, ruled Justice Shelley Fitzpatrick.
“I have great sympathy for the position of the pre-sale purchasers who have become embroiled in this litigation and who have now potentially lost the ability to obtain what they hoped would be their homes,” Fitzpatrick wrote in her ruling.
Nonetheless, she ruled that the mortgage holders on the condo project had legal priority.
“First, let me state the obvious – there are no winners in these circumstances,” the judge wrote. “The failure of the development will affect most, if not all, of the stakeholders.”
She noted that the first and second mortgages were owed approximately $44 million and the third more than $7 million, and that even sales of all the units at higher prices would be unlikely to pay back all of what is owed.
Murrayville House was placed in receivership last year. The 92-unit condo complex near Langley Memorial Hospital was repeatedly delayed during construction.
Dozens of pre-sale buyers put down deposits for units in 2015 and 2016, but have never moved in. The building was finally completed late last year, only for foreclosure proceedings and legal wrangling to prevent occupancy.
When the project went into receivership, the Bowra Group was appointed by the court as receiver to take over finishing the building.
Bowra had recommended that 40 buyers who had signed ordinary pre-sale agreements be allowed to take possession of their units under their original contracts.
However, some of the other creditors, including Forjay Management, opposed that. So did the project’s original builder, a numbered company headed by Mark Chandler.
The other creditors wanted the units sold off at current market rates.
“An appraisal obtained by the receiver in late January 2018 indicates that the units’ value is now collectively 46% higher than the contract prices, translating into a total increase in value of $5,461,005,” Fitzpatrick noted in her written judgment. “In large part, the arguments advanced on this application are directed to a determination as to who should ‘reap the benefit’ of this increase.”
The pre-sale buyers will be offered rights of first refusal on the units they had selected, said Mario Mainella, a senior vice-president of the Bowra Group.
“We have to find out who wants to buy them,” he said.
Condo prices in Langley have spiked by more than 32 per cent in the last year alone. Any buyers who still want their units will likely pay substantially more.
If the original buyers pass, Bowra will market and sell the remaining units, and people are expected to move into the building relatively soon.
“I don’t think we’re going to have to wait until the whole building’s done,” Mainella said.
The remaining 52 units will have to stay empty for a while longer, until the courts can sort out the tangle of conflicting ownership.
There were four mortgages on the condo project, as well as a number of certificates of pending litigation.
There are still multiple legal issues swirling around the building. With disputes between the original builder and the creditors, and among the creditors themselves, Fitzpatrick described the situation as “chaos” at one point in her judgment.