Troubled Calgary builder leaves Edmonton homebuyers with mortgages to pay on unfinished homes
3volution Homes has contractor licence in good standing on provincial registry
Four people who bought houses in northeast Edmonton from the same Calgary builder more than a year ago say construction has stalled, leaving them responsible for mortgage payments on homes they can't live in.
A CBC News investigation has found more than a dozen stalled home builds in the Fraser and McConachie neighbourhoods, all linked to 3volution Homes Group.
Thirteen 3volution builds have had building permits cancelled by the City of Edmonton. Nine of the company's new builds in Edmonton have lost new-home warranty coverage.
Court documents show tradespeople in the Edmonton area are seeking more than $180,000 in damages from the builder for unpaid invoices related to 3volution houses. No statements of defence have been filed.
Two of the homebuyers have complained to the builder, to police, to lending banks and to the lawyer they worked with.
"It's been unreal what we've had to go through," said Olamide Omotosho, who has an unfinished property in the McConachie neighbourhood.
3volution's owner, Ifeanyi Daniels-Akunekwe, initially agreed to an interview but cancelled it and has not responded to follow-up requests or emailed questions.
The situation has become dire for four homebuyers, who told CBC they can't afford to pay rent and make mortgage payments at the same time.
Omotosho said his credit score has plunged after he missed mortgage payments for his framed but unfinished house.
He said he and his wife no longer want to move in.
"This has robbed me and my family of the joy you would ordinarily have looking forward to going to your new home," he said. "It cost me so much pain."
Like Omotosho, Godfrey Kineeh learned of 3volution through someone in his church community.
Kineeh said he met with multiple people from 3volution, including Daniels-Akunekwe, in 2020, and by early 2021, had purchased a property on 14th Street, in the Fraser neighbourhood.
More than two years have passed since he obtained a mortgage and the land title, but the house is only partially built.
Kineeh said the builder has not been returning his calls or text messages and the situation has strained his relationships with his wife and children.
"It's completely destabilized everybody," he said.
Signing documents
During their home purchases, both Omotosho and Kineeh worked with real estate agents and with Fort Law, which has offices in Fort Saskatchewan and Edmonton.
Kineeh said he submitted documents, including his T4, to a real estate agent and that Daniels-Akunekwe later called him to say he had been approved for a mortgage. Kineeh said the builder told him someone from the bank would get in touch.
He said a man who identified himself as a Scotiabank employee called and asked him to sign his mortgage papers in person right away.
The man had Kineeh sign the documents inside a vehicle in a parking lot near a north Edmonton Scotiabank branch.
Kineeh's daughter, Monica, went with him at the time. She said the man told them the bank was closed for the holidays and signing the documents was urgent.
Andrew Garas, a Scotiabank spokesperson, said no Scotiabank employee conducted the parking lot meeting.
Kineeh said he and Monica later met with a lawyer from Fort Law in person in Edmonton to sign more documents about the sale.
Hans Aladejebi, Fort Law's lead attorney, told CBC News the builder referred the men to his law office and offered to pay for their legal fees.
Aladejebi said he was not aware that the homes the men were buying were not yet fully built.
"I was just under the impression that there were a few items to be finished," he said.
Aladejebi said he learned the houses were unfinished once the transactions were complete and the clients called him to report problems with the builder.
"As a member of the Nigerian community, I have assisted and continue to assist them in every way I can to get this matter resolved," he said.
Mounting mortgage payments
Omotosho's sale agreement with 3volution refers to his mortgage as a draw mortgage, meaning mortgage funds would be released to the builder as construction progresses, but Aladejebi said both his clients, Omotosho and Kineeh, had completion mortgages.
Completion mortgages, the other common kind of mortgage for new construction homes, mean mortgage funds are released once the home is finished.
The house Omotosho bought was already partially built. The first sale agreement with 3volution he signed said he would receive possession by July 8, 2021.
Omotosho said later that summer, he agreed to a September move-in date because he and his wife weren't in a rush to move.
But as months passed, Omotosho became concerned as he was asked to sign more amendments to the sale agreement, extending the deadline further.
Other than a roof having been installed, the house construction seems to have barely progressed since the day he bought it nearly two years ago, he said.
For months, Omotosho said, the builder transferred him money for mortgage payments — since the house was unfinished — but those payments stopped coming a few months ago.
Kineeh said the company's transfers to him stopped as well. Since the mortgage is in his name, he is responsible for making payments, but has not made the last five.
"Where will I get the money from, when I'm paying rent?" he said.
Both men said they told Edmonton police about the situation, but did not file reports after being told their matters were not criminal.
Four homebuyers, including Omotosho and Kineeh, showed CBC News bank records of their mortgage payment history.
Bank investigating
Kineeh said he raised concerns with Scotiabank and later learned, by obtaining documents from a manager, that the bank had T4 documents with incorrect income amounts for both him and his daughter.
The 2018 T4 he received from the bank listed his employment income as more than $116,000; his actual income for that year was about half that amount.
The bank's T4 for his daughter showed she earned nearly $50,000 working for an immigration company in 2019. His daughter, who was a student at the time, earned less than $1,000 that year. Kineeh and his daughter showed the four T4s — the ones they filed and the ones they obtained from the bank — to CBC News.
Garas, the spokesperson for Scotiabank, said the bank can't comment on individual customer matters for privacy reasons but takes potential fraud cases very seriously. He said the matter has been referred to the Edmonton Police Service and regulatory bodies.
EPS spokesperson Scott Pattison said its economic crimes section is aware of the complaint and police will be investigating, but he could not share specific allegations or say how many people have contacted police.
Omotosho, who said he never went into a bank to sign his CIBC mortgage documents but instead worked with 3volution's mortgage specialist, has asked CIBC to look into his case.
"We're working with our client and fully investigating the matter," said Josh Burleton, a spokesperson for CIBC.
Law Society citations
Omotosho and Kineeh said they contacted the Law Society of Alberta to discuss their situations.
Omotosho's wife filed a claim this year against the Fort Law lawyer, Aladejebi, with the Alberta Lawyers Indemnity Association, a subsidiary of the law society that compensates people who have suffered financial losses due to a lawyer's negligence.
Omotosho said he spotted "Temple Law," a law firm in Calgary, on his land title certificate. He said his lawyer told him Ikechukwu Okafor, a lawyer with Temple Law, was representing the builder during the house sale.
According to the Law Society's public registry, five citations were issued against Okafor on March 15, 2022, including an allegation that his involvement in a real estate transaction "unknowingly facilitated mortgage fraud."
The allegations are unproven; a hearing for Okafor has not been scheduled. CBC News does not know if the citations are related to 3volution's Edmonton houses.
Okafor has not made himself available for an interview and did not respond to emailed questions.
Warranty coverage withdrawn
Michael Francoeur, a spokesperson for Alberta's ministry of municipal affairs, said neither Service Alberta's consumer investigations unit nor Municipal Affairs' residential protection program has received any complaints about 3volution.
According to the program's public builder registry, the company has a general contractor licence in good standing and no listed enforcement actions.
The program's property registry shows the company has 26 homes that have started construction in Edmonton. Of those, nine have had new home warranty coverage withdrawn by Millennium Insurance Corporation.
New home warranty coverage, a requirement for all new homes in Alberta, is meant to protect homeowners against construction and materials defects.
Builders must purchase the coverage from one of seven providers to get building permits, but providers can terminate insurance contracts.
Ana Vasquez, Millennium's home warranty manager, told CBC News in an email that the 3volution policies were cancelled "due to the builder being in breach of the membership agreement."
Francoeur said suspended licences appear on the provincial registry but other compliance activities, like educational interventions and licensing restrictions, are not posted.
He said builders can be restricted from starting new construction projects while resolving compliance concerns, such as outstanding warrants or a lack of warranty coverage.
Last year, of approximately 26,000 new homes registered in Alberta, 81 warranty contracts were terminated during construction.
Cancelled permits
Mary-Ann Thurber, a spokesperson for the City of Edmonton, said the city's safety codes compliance team has been in communication with 3volution about 13 properties and visited them regularly.
"The city is committed to continuing to work with this builder to assist in the completion of these homes," she said.
Thurber said all the builds had permits properly applied for and issued, but due to a lack of progress, the 13 permits were cancelled. She said the builder has advised the city that the company is working to reactivate home warranties. Once the homes have home warranties, the builder could reapply for the permits, she said.
The city would not release the addresses of the 13 homes, citing privacy considerations, but all nine of the homes with withdrawn home warranty coverage, including Omotosho and Kineeh's properties, currently lack building permits, according to the city's public building permit database.
Unpaid jobs
Court documents show multiple companies in the Edmonton area have filed statements of claim against 3volution Homes Group, alleging the builder has not paid outstanding invoices.
Save on Labour Concrete, based in Leduc, Alta., filed a statement of claim in March 2022 alleging 3volution Homes owes it more than $140,000 for concrete work.
No statements of defence have been filed.
The company also owes a former employee more than $10,000 in wages and vacation pay, according to court documents and the province's public list of unsatisfied judgments. 3volution's judgment date was Dec. 4, 2022 ,and the list, according to the Ministry of Jobs, Economy, and Northern Development, is updated bi-weekly.
Advice for homebuyers
Carmela Durante and Kelli Flynn, mortgage brokers in the Edmonton area, said builders often give homebuyers a list of approved lenders and brokers. They said meeting clients at convenient locations to sign documents is also normal.
Durante said delays with home builds have been common during the pandemic, but most are completed within 12 to 18 months; anything longer would concern her.
She said mortgage brokers and banks scrutinize documents and can detect fraudulent figures.
"It's really rare now that the lender doesn't catch on to fraudulent documents," she said.
Both brokers recommend homebuyers research builders in advance.
Flynn recommends asking how long they have been in business, how many homes they have built and what kind of new home warranty protection they offer.
"You need to do your homework and you need to determine who exactly you're doing business with," she said.
Roberto Noce, an Edmonton lawyer with expertise in real estate and land titles, said he recommends getting independent legal advice when buying a home. Buyers typically visit banks or financial institutions in person, he said.
He said the northeast Edmonton homebuyers are in an unfortunate position.
"Generally, there is no party that will come to their rescue unless they take it upon themselves to engage someone like a lawyer to help them navigate the system."
For more stories about the experiences of Black Canadians — from anti-Black racism to success stories within the Black community — check out Being Black in Canada, a CBC project Black Canadians can be proud of. You can read more stories here.
ABOUT THE AUTHOR
