Development placed into receivership
A large pre-construction residential development north of Toronto has been placed into receivership, leaving over 1,000 homebuyers facing uncertainty about the future of their purchase agreements.
Pace Developments, operating as Mapleview Developments, promised over a thousand condos and townhomes across six phases on 20 hectares of land but has since encountered severe financial difficulties, CBC Toronto reported.
Millions owed, construction halted
The Ontario court appointed KSV Advisory as the receiver in March after lender KingSett Mortgage Corporation claimed the developer defaulted on a loan of over $47 million.
“The applicant has lost all confidence in the debtors’ management… specifically due to their significant debt load and dire liquidity issues,” KingSett's lawyers stated in their application.
In addition to KingSett's loan, at least three other lenders are owed millions, while 10 construction liens totalling over $4 million have been registered against the property.
KingSett argued a receiver would provide "the most effective and appropriate method" for an "orderly" sale of the assets.
Pace Developments did not respond to requests for comment.
What happens next
In an April notice, KSV Advisory stated it is currently reviewing the project status. The receiver confirmed that 264 units across the first two phases had closed, while 47 more partially built units remained unsold. An unspecified number of pre-sales exist for the later phases 3 and 4, which have not begun construction.
"At present, no action has been taken... with respect to the project completion or any purchase agreements," the notice read. "The purchase agreements remain in full force and effect, subject to the terms of the receivership order."
Real estate lawyer Mark Morris said buyer options are limited for now as the receiver weighs completing existing contracts versus cancelling agreements and selling to a new developer. Morris predicted honouring the deals is likelier to maximize returns despite delays.
"They'll be completed to the standard of the Ontario Building Code, and the purchasers will be forced into a closing position, though it will be delayed," Morris stated.
Previous controversy
The project has faced prior regulatory issues. In 2021, Mapleview sent letters seeking $100,000 more from ~70 Phase 1 buyers, citing COVID challenges. This prompted Premier Doug Ford's criticism and a probe by Ontario's homebuilder regulator, HCRA.
Read more: What do real estate lawyers do?
In November 2023, HCRA alleged Mapleview unlawfully cancelled dozens of deals and misled buyers to "unethically extract over $3 million". HCRA claims some contracts were altered before submission.
The regulator has not yet scheduled a disciplinary hearing against the company.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
