GTA developer ordered to pay $180K after illegally selling pre-construction homes

A Toronto-area developer has been ordered to pay more than $180,000 after pleading guilty to selling a new home without a licence, according to Ontario's home construction regulator. 

Ideal (BC) Developments Inc. was never licensed to sell homes in the province yet it illegally accepted hundreds of thousands from unsuspecting buyers for new homes in Richmond Hill, Ont., the Home Construction Regulatory Authority (HCRA) said in a news release issued Dec. 18. 

In 2022, CBC Toronto reported that Ideal (BC) Developments Inc. was the subsidiary company of a failed development that had left several buyers in limbo. CBC Toronto had confirmed 29 purchasers put down a combined $5.7 million in deposits across two cancelled townhouse projects from Ideal Developments where construction never started.

The company has been ordered to pay $184,375 in total, of which $150,000 will be distributed to buyers to help off-set the costs of lost deposits. Last year, CBC Toronto reported individual deposits ranged from $120,000 to $250,000.

"While this restitution does not compensate purchasers for their lost deposits, we hope it helps alleviate some of their financial loss," Wendy Moir, the HCRA's CEO, said in the news release. 

The release adds that the HCRA has refused to renew licences for companies related to Ideal (BC) Developments Inc.

CBC Toronto is attempting to contact the company for comment. This story will be updated if the company responds.

Fine a 'slap on the wrist,' but promising: lawyer

Mark Morris, a real estate lawyer with Legalclosing.ca who is not connected to the case, said the sum the company has been ordered to pay is "minute." 

But the HRCA is starting to have some teeth and a few years ago, there wouldn't have been this kind of consequence handed down, said Morris. However, it's still not close to enough, he said, calling the fines "wholly deficient."

"Consumers have been sorely lacking in protection for many years," he said.

"It's not a wicked bite out of that apple, but it is something," he said. 

Morris also said that it could be unlikely that the buyers will see the money, as with bankruptcy process, corporations involved in land development that have secured loans will be the first to be paid.

"This probably will have more of an effect insofar as these people will not be allowed to build again in Ontario," he said. They did not have licences, and now they will likely not be granted any in the future, he explained.

"It's always been more a slap on the wrist, and in this instance, it's exactly that," he said.

But this case is the first time the HRCA has issued this kind of enforcement, which is hopefully a sign they'd be willing to take on more bad actors in the future, said Morris.

"We're not really talking about significant fines that would deter people working on $50-60-million projects. Having said that, this is the beginning. Let's give them their time and let's see where we go," he said.