A lawyer for a mortgage company accused the embattled developers of three debt-ridden Lower Mainland condo projects Friday of misappropriating funds for the Canada Revenue Agency.
But under questioning from a judge who placed three thin property projects into receivership within a month, Kingset Mortgage Corp. attorney Emma Newberry said her client did not make “criminal intent” allegations against the developers.
“When I see that word, it means on the far side – it suggests you need to go to the police,” Judge David Masuhara told the lawyer.
“I don't think that's the intention,” Newbery replied.
'Ultimately controlled by one person'
The exchange was one of only a few bumps in a smooth 30-minute process that ended with Masuhara appointing a receiver for unsold units at Burnaby's completed Highline condo building and Richmond's Minoru Square — a project that appears to have stalled.
Newberry said the projects carry a combined $250 million worth of mortgages — and September defaults are now accruing interest at a rate of about $70,000 per day.
Friday's order comes weeks after Masuhara placed Thind's District Northwest project — a two-tower, 1,023-unit yet-to-be-built complex billed as “Surrey's new growth center” — into receivership after Thind defaulted on an $80 million mortgage. That project.
Although Thind is the developer, the parties named in the legal proceedings are companies and partnerships involved in building each of the individual projects — each of those entities, informed Daljit Thind, president of Thind Properties.
“The three projects are ultimately controlled by the same person,” Newberry told the judge.
She said the developer used Minoru Square as collateral for the High Line — and vice versa.
The deposit is allegedly not 'at risk'
The fate of the three projects has attracted a great deal of media attention and questions from pre-sale buyers wondering about the implications of receivership for their units.
Newberry emphasized that 40 units are currently occupied in the Highline, while 163 units are in the developer's name. The receiver was not seeking control of the occupied units.
In an affidavit filed in court, Daljit Thind claims 90 percent of the units in District Northwest have been pre-sold — leaving a $78 million deposit held in trust with a law firm.
“Despite the delay in the start of construction, I do not believe that the deposit of the pre-sold units is at risk because they were sold below the current market value,” Thind wrote.
In response to a judge's question about the sale of units at the Highline, an attorney for the receiver said the firm initially hired to market the project would be hired to sell the units at the price agreed upon in the first place by the mortgage company. .
Mounting Claims
Thind Properties did not file a response to the application seeking a receiver for the Highline and Minoru Square properties; Highline's level corporation responded but did not take a position.
In strata housing, condo owners have title to their individual lots but own the building's common property and common assets as a strata corporation. More than 1.5 million British Columbians live in substandard housing.
Strata Corp. of the Highline claims the developer owed Strata more than $1.1 million in unpaid fees it filed against the building last summer.
Strata Corporation claims its lien rank in priority over the mortgage.
Beyond the financing fight, workers, contractors and a real estate agent have filed lawsuits related to the Highline in recent months, claiming commissions on a deal to sell the building's $47.2 million worth of units to the hotel company. .
Other claimants include a company seeking about $1.7 million to install steel studs and drywall systems on the Highline, a firm claiming about $600,000 for electrical work, and a glazier allegedly owed nearly half a million dollars.
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