Archive for April, 2009

Lenders beware: Phony mortgages are the bank’s problem, court rules

Wednesday, April 8th, 2009

B.C. Court of Appeal says owners of properties hit by fraud don’t have to pay

Fiona Anderson
Sun

Homeowners can rest easier, but lenders may be scrambling after British Columbia’s highest court ruled in favour of the owners and left lenders holding the bag if someone fraudulently takes out a mortgage on property they don’t own.

In two decisions released this week, the B.C. Court of Appeal said mortgages placed on property by persons who had fraudulently transferred title to themselves were invalid, and the lenders could not collect from the legitimate owners.

In both cases, an unknown party had forged documents that transferred property into the name of a known co-conspirator, taken out mortgages on the property, and left with the money. In the first case, the person took out mortgages totalling $95,000 from two private lenders. In the second, the single mortgage was worth $320,000.

The lower court had transferred title of the properties back to their rightful owners but said the mortgages still stood, leaving the value of the properties seriously diminished.

Under the province’s land titles system, those homeowners would have been compensated by the province’s Assurance Fund — which protects owners against fraudulent loss of property. So it was the government and the public that would have lost out in the end.

With seven claims made against the Assurance Fund since 2006, involving $1.6 million in fraudulent mortgages, the Land Title and Survey Authority of B.C. (LTSA), which is responsible for overseeing the fund, decided to appeal the lower-court decisions.

The problem in these cases is that both parties are victims of the person carrying out the fraud, said Robert Janes, a lawyer with Miller Thomson LLP, which represented the LTSA in the hearings.

“This is not a bad guy versus a good guy,” Janes said. “It’s innocent homeowner versus innocent mortgagee.”

The difference is that if the homeowner is out money because the title is incorrect, the Assurance Fund kicks in. If the lender is out money because its mortgage is invalid, the fund does not pay out.

The LTSA is given the duty of protecting the fund, and it’s eager to pay those who are entitled, Janes said. “But they can’t pay out to people who aren’t covered under the act.”

“The reality is, just like in any business dealings, there is always the possibility you are going to run into a fraudster and the government doesn’t provide insurance against all forms of fraud,” Janes said.

The Court of Appeal’s decisions surprised lenders.

“The business community and lenders had thought … that they could rely on the state of title as shown in the land registry,” said Roger Lee, a lawyer with Davis LLP, which represented the lenders in both cases.

Now that’s no longer the case, lenders must ensure a borrower actually has the title the land registration system says he has, Janes said. They can do that by asking for more security or a credit history, he suggested.

“They are the ones that actually deal with the fraudster,” Janes said.

© Copyright (c) The Vancouver Sun

City council backs plan for prefab housing

Wednesday, April 8th, 2009

Proposal for 550 units relies heavily on provincial funding that Victoria has yet to commit

Doug Ward
Sun

This prefab student housing project in Amsterdam uses modular shipping containers. Real estate consultant Michael Geller has suggested temporary modular housing for Vancouver’s homeless.

Vancouver city council is backing a proposal to provide 550 temporary housing units for the homeless, including prefabricated modular units, by the end of the year with funding for up to five years.

However, the proposal relies heavily on provincial funding, and Housing Minister Rich Coleman said there is no money for it in this year’s provincial budget.

The interim strategy involves placing 190 prefab units on city-owned land adjacent to the Drake Hotel in the Downtown Eastside and at the Old Continental Hotel on Granville Street.

“This is the boldest step yet from the city to aggressively deal with homelessness,” Mayor Gregor Robertson said.

Another 250 units would be leased through hotels and single-room occupancy buildings, and 110 units more through conversions in government-owned buildings.

The City of Vancouver would provide $13 million in capital improvements and lease costs, with the private sector contributing a proposed $12 million for capital improvements and the province $27.5 million for operating costs.

But the provincial government has not committed any funding for the project. “We’ve not made any financial commitment to this thing as yet,” Coleman said.

“It’s just a report before council at this stage,” he said. “We haven’t got anything in our budget this year … to add to this thing, nor have we really actually been asked at this time.”

Coleman said the province would meet with the city in future to determine what is possible.

The modular housing component was based on proposals from architect Gregory Henriquez and real estate consultant Michael Geller, who suggested the idea during Geller’s unsuccessful council bid in last fall’s municipal election.

The province asked Geller to study the feasibility of the modular concept and he concluded that the idea was a practical one. Geller said capital costs would vary between $37,000 and $46,000 per unit, compared to $302,000 for permanent units already announced by the province.

“One of the true benefits of this approach is that we can have people housed in a matter of months rather than a matter of years,” said Geller.

“While some may be concerned that this housing will not be attractive, I think the plans produced to date clearly demonstrate that a great concern may be that it’s too attractive and hence will become permanent.”

© Copyright (c) The Vancouver Sun

City of Van decides on 2010 Olympic Rental regulations

Tuesday, April 7th, 2009

No short- term renting under the current law

JEFF LEE
Sun

Vancouver council will decide today whether to relax laws governing temporary accommodation in residential zones during the 2010 Olympics.

The move, if adopted, would likely see upwards of 1,000 applications from homeowners who want to rent two or more rooms for 30 days or less. Currently, the city does not allow such short-term rentals in residential districts.

The catch will be that anyone wanting to set up such “ bed and breakfast” lodging will also have to apply for a business licence.

Coun. Geoff Meggs said Monday he’s in favour of the zoning bylaw relaxation because it would create extra rooms for visitors without endangering current rental housing.
Under the proposal, houses for Olympic rentals cannot have been occupied by a tenant or boarder after Sept. 1. “ The idea is to take the pressure off our existing stock of rental housing,” Meggs said. “ We’re actually trying to expand the stock of housing during the Olympics by protecting units that already have renters.”

A report to council notes that there are virtually no hotel rooms available in Vancouver during the Games. Vanoc has reserved 80 per cent of the 12,000 hotel rooms in downtown Vancouver and many hotels are withholding the remaining stock. About 350,000 ticketed spectators are expected, creating intense pressure for renters. It says residents wanting to rent a single room for one or two people don’t need a business licence. But renting multiple rooms or an entire unit would require a licence, which staff want to set at $ 150. That’s higher than the $ 108 now required for long-term rentals, which staff say is necessary to recover the costs of the application program.

But Meggs said he had already heard from homeowners and other councillors who say the proposed fee is too high. “ We’re not throwing away the rule book. But let’s be pragmatic. Lots of people are not going to bother applying for a business licence,” he said. “ The risk they run is if their neighbours get fed up with people coming to and from the garage and make a complaint, they could be shut down and face a fine.”

Council will also vote on a recommendation to allow the Vancouver Organizing Committee to park its fleet of 800 buses on a piece of industrial land in south Vancouver.

Las Vegas – under the deserts dry spell

Tuesday, April 7th, 2009

Four great locales to sample in the U.S. Southwest

Barbara Braidwood and Rick Cropp
Province

Las Vegas, not surprisingly, is home to the Neon Museum, the Liberace Museum and the Pinball Hall of Fame – along with some of the best free entertainment around.

Enough rain, wind and snow. Pack away that heavy coat and hat. What you need is sunshine and blue skies in the warm dry desert air where everyone but a curmudgeon will find true happiness.

Will it be the invigorating glitz of Las Vegas, the panoply of world class activities in Phoenix or the mellower pace of desert mountain cities of Palm Springs and Palm Desert?

Las Vegas

You know about the gambling, world-class shows and noshing. But here’s a highlight you may not know about: Las Vegas (www.visitlasvegas.com) boasts the world’s largest chocolate fountain (Guinness World Records says so) spanning nine metres from ceiling to floor.

It’s at the Jean-Philippe Patisserie (www.jpchocolates.com) at the Bellagio Hotel & Casino and circulates 950-kilograms of chocolate at a rate of 115 litres per minute.

We certainly don’t tend to think of museums in Las Vegas, but there are some unusual ones that are worth a gander. Pack your pockets with coins for the Pinball Hall of Fame (www.pinballmuseum.org) so you can try your hand at being a pinball wizard.

The Atomic Testing Museum (www.atomictestingmuseum.org) relates the beginning of the atomic age when dozens of bombs were tested nearby.

Meanwhile, the Neon Museum, (www.neonmuseum.org) preserves the area’s neon signs. The boneyard tours will show you some fantastic examples of the craft.

And then there’s Liberace Museum & Foundation (www.liberace.org). Need we say more?

If you love to haggle, this could be your best time to visit Las Vegas. Grab coupon booklets or attraction flyers at the airport or at your hotel. After you pick what you want, perhaps a helicopter flight for lunch at the bottom of the Grand Canyon with a finishing flourish of a low altitude flyover of the strip (already slashed from $390 US to $287 US in an ad we saw), call and ask if there is a better rate. Ask about any standby discounts or mid week or even weekend discounts.

Hotel rooms are as cheap as $30 US and ask for any complementary incentives. For instance, the Venetian has a credit for shows, gaming or the spa while several other hotels have restaurant or cabana credits.

Pop into a pawnshop. Right now they have the largest stock of luxury items ever.

Walking the strip, gazing at the incomparable architecture and peeking into the interiors of the hotels, is some of the best free entertainment around.

Don’t miss the evening version of water, music and light at the Fountains of Bellagio (every 15 minutes). We think it’s still the best free show in town.

PHOENIX

Yes, you can golf, shop or watch professional sports until you can’t stuff in another hotdog or hit the culture trail of art galleries and theatres until your eyeballs hang on your sunburned cheeks.

But a different view of Phoenix (www.visitphoenix.com) comes from the air, the fringes of the city or even from underground.

When you need a break from all the good food, sports and golf, take a balloon ride, dig up a little history, drive out, way out, into the desert or climb a mountain.

Phoenix really did rise from the remains of another civilization, and traces of the 3,000-year-old Hohokam people — who disappeared around 1500 — remain. Beneath the downtown Phoenix Convention Center are the remains of about 40 Hohokam pit houses (www.phoenix.gov/ PUEBLO/museum.html) and hundreds of items recovered during the construction are on display.

Afterwards, go to the nearby Phoenix Museum of History (www.pmoh.org) for a view of the city’s history up to the present day. Unlike Canada, where trees and brush so often obscure your view, with any elevation at all in Phoenix you can see for miles.

The city has mountains on two sides and a hump in the middle called Camelback Mountain. Camelback’s sheer red sandstone cliffs can be circumvented or challenged with trails to the top (350 metres above the desert), where there is a spectacular outlook. The easy trails at the bottom are a stroll for anyone with a good pair of walking shoes, but the top is a bit of a struggle.

Mountains at the edges of the city are higher and offer much more diversity, from really easy to death-defying trails. The North Mountain Visitor Center has exhibits illustrating the Sonoran Desert‘s richness as well as maps of hiking trails snaking around the more-than-600-metre mount.

Ballooning provides a little easier way for the whole family to attain nearly the same altitude. Arizona Ballooning (www.arizonaballooning.com/Maps/maps.htm) and Hot Air Expeditions (www.hotairexpeditions.com/general.htm) can take you up for a bird’s eye view.

PALM SPRINGS

AND PALM DESERT

The valley that holds Palm Springs and Palm Desert (www.VisitPalmSprings.com or www.palmspringsusa.com) and other small towns is surrounded by wilderness desert with hundreds of visible trails meandering up the hills and mountains. It may seem impossible to get lost if you stroll close to the valley bottom, but take care if you are going to tackle the snow capped peaks. Some soar to more than 3,500 metres and as soon as you enter the forest, landmarks disappear.

Another way to see the desert with a bit more range is to take a tour with Desert Adventures (www.red-jeep.com). Their trademark red jeeps offer tours of the San Andreas Fault and nearby Joshua Tree National Park and their adventure drivers will regal you with tales of Native American history and culture, old mining lore, ethno-botany, geology and the tours will bestow panoramic vistas.

We loved the Living Desert Zoo and Gardens (1-760-346-5694; www.livingdesert.org). There is a trolley system to take you through the nearly 5,000 hectares, but walking over a crest to find the head of a giraffe poking above the trees is a thrill you won’t want to hurry through. Some of these animals, living in gargantuan cages among the cactus and cliffs, are the last of their species.

Palm Springs has long been a playground for millionaires and movie stars. The valley has pockets of ritzy shopping and art galleries, but for our money the best shopping is in the second-hand shops. Whether it is restless décor syndrome or funky furniture fads or ancient movie stars leaving entire estates to be liquidated, Palm Springs has some of the most unusual second-hand goods anywhere.

One-of-a-kind, custom-made doodads and clothes are even more bizarre or fashionable depending on your predilections. The store Modern Way (1-760-320-5455, http://www. psmodernway.com/page6a.html), has some good examples.

On Saturday and Sunday mornings the College of the Desert Street Fair (1-760-776-0152; www.codstreetfair.com) is filled with such items as hand-tooled belts, feathered sun hats, soaps, jewellery, food, handbags, paintings, metal work and semiprecious stones. Go early. By 11 a.m., the place is jammed. (If the parking lineup is long, leave your car across the road from the college in the residential area.)

Thursday evening, make your way to Villagefest (1-760-320-3781, www.villagefest.org), an open-air market on Palm Canyon Drive (between Amado and Baristo Streets). The road closes to car traffic and vendors set up booths with arts and crafts and food. Wander around and then plant yourself for some unmatched people watching.

Barbara Braidwood and Rick Cropp (RickandBarbara@telus. net) are Vancouver based writers.

© Copyright (c) The Province

New Web address endings could be start of turf wars

Tuesday, April 7th, 2009

Charisse Jones
USA Today

Minor Childers wants a .eco domain for environmentalists. “There’s prestige to it.”

A sea change may be coming to cyberspace with Web addresses ending in anything from .a to .z. That has businesses increasingly worried they will have to spend millions to guard their brand names.

The familiar .com, .net, .org and 18 other suffixes — officially “generic top-level domains” — could be joined by a seemingly endless stream of new ones next year under a landmark change approved last summer by the Internet Corp. for Assigned Names and Numbers, the entity that oversees the Web’s address system.

Tourists might find information about the Liberty Bell, for example, at a site ending in .philly. A rapper might apply for a Web address ending in .hiphop.

“Whatever is open to the imagination can be applied for,” says Paul Levins, ICANN’s vice president of corporate affairs. “It could translate into one of the largest marketing and branding opportunities in history.”

Many businesses see more problems than profits — opportunities for scammers to exploit brand names and mislead consumers, or even attack brands.

“It costs companies hundreds of thousands of dollars, if not millions, to enforce their trademark rights in the existing space, so imagine how expensive it will be when Verizon gets infringed in a thousand new domains,” says Sarah Deutsch, vice president and associate general counsel for Verizon. “Many businesses feel this is a form of extortion.”

To beat a competitor to the punch, a company might decide it needs to control a new generic domain, such as .cereal or .detergent, but it would be costly. The currently proposed application fee is $185,000, says Levins, plus an annual “continuance” fee of $25,000. If more than one company wants a suffix, there could be a bidding war.

A more likely scenario would be for a business just to register site Web addresses pairing their brand name with any new extensions, such as fios.telephone or gillette.razor. But even that defense could cost marketers up to $1.5 billion, estimates the not-for-profit Coalition Against Domain Name Abuse.

Many businesses already do that, usually then redirecting users from, say “product”.net to the product’s primary website ending in .com. More generic domains will add to that cost.

Companies will “do it more out of competitive necessity than any real desire or ability to meet consumer needs or improve their business, and that’s a bad reason,” says Peter Fader, professor of marketing at the University of Pennsylvania’s Wharton School. “I would bet a large number of registrations would be purely that — people carving out turf they don’t want other people to have, but not necessarily turf they can do anything good with.”

The turf war could be endless, says Dan Jaffe, executive vice president of the Association of National Advertisers trade group of big marketers. “Think about some of the companies out there. Some have hundreds, maybe thousands of brands. … It’s really open-ended.”

Levins says ICANN is still taking comments on rules to protect trademarks, secure the Web and solidify a process to challenge new extensions as offensive.

ICANN won’t take new generic domain applications “until we’ve addressed those concerns,” he says, adding that the earliest would be the end of this year.

While some fret about new, more specific generic domains, others see opportunity.

“There’s prestige to it,” says film producer Minor Childers, who co-founded Dot Eco to push for a .eco domain for use by environmentalists. Al Gore is among its supporters. “It’s of value to someone who wants to say something about their identity.”

Such value would take effort to establish, however. At the end of 2008, 90.4 million of the 177 million registered website names ended in .com or .net, according to VeriSign, the company that manages those extensions.

Liliana Gil, director of global marketing services with Johnson & Johnson, doesn’t see the common suffixes being overtaken but believes, “This could be a fun new way to communicate a message digitally. …You could have tylenol.children, tylenol.pm.”

A new extension likely would need a marketing push. Generic top-level domains, such as .travel, approved in 2005 and .biz, approved in 2001, have been slow to catch on, says Ron Jackson, editor of Domain Name Journal.

“.Com was the only choice in the early years of the Internet, so that has been branded in the public’s consciousness,” he says. “If you’re a small businessman and you buy a new extension you’ve got an uphill fight. … It’s going to be like being invisible on the Web.”

GM, Segway team up on 200-mpg 2-seater

Tuesday, April 7th, 2009

James R. Healey
USA Today

The Project PUMA prototype takes a spin in Brooklyn on Saturday

General Motors  is teaming with Segway, the scooter company, to develop a battery-powered vehicle to cut urban congestion and pollution.

The companies plan to announce the partnership Tuesday in New York, where they are testing a prototype of the partially enclosed, two-seat, two-wheel scooter. The venture is called Project PUMA, for Personal Urban Mobility and Accessibility.

The companies hope to recruit partners, such as cities or colleges, to set up Puma travel lanes, like bicycle lanes. They’d be used to test the vehicles and their on-board wireless communicators designed to keep them safely apart and even operate them while drivers do other tasks.

The Pumas also could be operated manually. Not intended for highway use, they would hit about 35 miles per hour and go up to 35 miles on a charge.

“There’s no technology that has to be invented here. It’s really just putting the pieces together,” says Chris Borroni-Bird, director of the project for GM.

Nonetheless it could take years to get to market. “It’s not going on sale anytime” soon, he said.

The partnership with Segway began about 18 months ago, predating GM’s emergency survival loans from the government.

GM is developing the electronic wireless systems for safe, autonomous operation. Segway is responsible for the self-balancing, electric, two-wheel chassis. The prototype has “training wheels” front and rear, helpful at stoplights. Pumas would use lithium-ion batteries, like those Segway uses in its stand-up scooters.

Though being unveiled in New York, the Pumas might appeal most in densely packed cities in places such as India and China, Borroni-Bird says. There they would seem a big step up from bicycles. Americans, who are used to cars, might not take them as seriously.

He forecasts energy consumption equivalent to 200 miles per gallon of gasoline. That falls to about 70 mpg adding in fuel to generate electricity used to charge its battery.

Building permits surge in B.C.

Tuesday, April 7th, 2009

Sun

VANCOUVER SUN PHOTO ILLUSTRATION BY MAGGIE WONG

British Columbia saw a surprising 86-per-cent surge in the value of building permits issued in February, a month when the indicator of construction activity was heading rapidly down for Canada as a whole.

And while the total value of all permits increased in 17 of the 34 main Canadian metropolitan areas, Metro Vancouver reported the most significant increase — up 137 per cent, to $330.6 million from just $139.5 million in January.

The Vancouver Regional Construction Association calls February’s data “a positive sign” following a steady decline in activity since October 2008, but builders in the region aren’t ready to announce that the slump has ended.

VRCA president Keith Sashaw said in a news release Monday: “February’s permit values are promising for construction industry, and will offset the sharp declines in building activity we’ve seen in recent months.

“However, given the difficult economic conditions across the world, it is too early to tell if we are through the worst of it.”

Sashaw noted that construction in the region is coming off a seven-year boom “unlike any we have seen before,” so builders expect the industry to see less activity in 2009 than 2008.

“But,” he added, “our members are busy, and it is very encouraging to see the industry gaining strength.”

The value of B.C. residential permits rose by 78.9 per cent in February, to $331.6 million, from $174.2 million the previous month.

A different picture emerged for much of the rest of the country. The value of Canadian building permits fell 15.9 per cent to $3.7 billion in February, led by a big decline in the non-residential sector in Ontario.

Most economists had expected a national decline of between 3.5 and four per cent during the month, following a revised drop of six per cent in January.

Non-residential permits plunged 30.5 per cent to $1.6 billion in February. “This decline was due to a drop in Ontario and decreases in four other provinces,” the federal agency said.

Residential permits nationally were down 0.3 per cent to $2.1 billion.

Ian Pollick, economics strategist at TD Securities, said “this is a weak report and further suggests that the pace of building activity has come against pretty strong economic headwinds over the past few months, as growth has been under pressure.”

“And as the correction garners momentum, the pace of construction activity will likely continue to moderate in the near term.” he said.

In the non-residential sector, the value of institutional building permits fell 56.4 per cent to $363 million in February, compared with a 64.2 decline the previous month. “The decrease came mainly from construction intentions for medical buildings in Ontario and Quebec and a decline in permits for educational institutions in Ontario and Alberta,” Statistics Canada said.

Commercial permits dropped 20.4 per cent to $972 million, with the declines mainly in office and recreational intentions in Ontario. Meanwhile, industrial permits rose 14.3 per cent to $236 million –rebounding from a 50.8 per cent drop in January –with gains reported in six provinces.

© Copyright (c) The Vancouver Sun

Communities print own currencies to keep cash flowing

Monday, April 6th, 2009

Marisol Bello
USA Today

In Detroit, three downtown businesses have created a local currency, or scrip, to keep dollars earned locally in the community. By David Coates, The Detroit News, via AP

A small but growing number of cash-strapped communities are printing their own money.

Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.

The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.

Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.

Ed Collom, a University of Southern Maine sociologist who has studied local currencies, says they encourage people to buy locally. Merchants, hurting because customers have cut back on spending, benefit as consumers spend the local cash.

“We wanted to make new options available,” says Jackie Smith of South Bend, Ind., who is working to launch a local currency. “It reinforces the message that having more control of the economy in local hands can help you cushion yourself from the blows of the marketplace.”

About a dozen communities have local currencies, says Susan Witt, founder of BerkShares in the Berkshires region of western Massachusetts. She expects more to do it.

Under the BerkShares system, a buyer goes to one of 12 banks and pays $95 for $100 worth of BerkShares, which can be spent in 370 local businesses. Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares. In Detroit, three business owners are printing $4,500 worth of Detroit Cheers, which they are handing out to customers to spend in one of 12 shops.

During the Depression, local governments, businesses and individuals issued currency, known as scrip, to keep commerce flowing when bank closings led to a cash shortage.

By law, local money may not resemble federal bills or be promoted as legal tender of the United States, says Claudia Dickens of the Bureau of Engraving and Printing.

“We print the real thing,” she says.

The IRS gets its share. When someone pays for goods or services with local money, the income to the business is taxable, says Tom Ochsenschlager of the American Institute of Certified Public Accountants. “It’s not a way to avoid income taxes, or we’d all be paying in Detroit dollars,” he says.

Pittsboro, N.C., is reviving the Plenty, a defunct local currency created in 2002. It is being printed in denominations of $1, $5, $20 and $50. A local bank will exchange $9 for $10 worth of Plenty.

“We’re a wiped-out small town in America,” says Lyle Estill, president of Piedmont Biofuels, which accepts the Plenty. “This will strengthen the local economy. … The nice thing about the Plenty is that it can’t leave here.”

 

Rising number of condo developers feel the pinch in a tough economy

Monday, April 6th, 2009

Tight credit leads to firms seeking creditor protection or projects going into receivership

Fiona Anderson
Sun

The number of real estate sales may have bounced back in March compared to February, but they are still well below levels of a year ago, and so are prices. What is clearly up, however, is the number of condominium developers seeking creditor protection or going into receivership.

It started in June 2007, when the Riverbend condominium project in Coquitlam was the first to succumb and the Bowra Group was appointed receiver. Since then the Bowra Group has been involved in 11 more developments that are struggling and in creditor protection until they can restructure or have gone into receivership.

“I think it’s just a sign of the economy. The forest industry has been in trouble for some time and has its casualties, and the real estate industry has been challenged for a while now,” Bowra group president David Bowra said in an interview.

Most of the developments follow the same pattern. The developer runs out of money, the lender goes to court and has a receiver appointed and the receiver finishes the building and gets the best price it can for the units. Others seek creditor protection, asking the court for time to get their financial houses in order before the lender comes knocking.

Many developers got into trouble when credit markets seized up in 2008, said Larry Prentice, senior vice-president at Ernst & Young Inc., which is acting as receiver for the Resort at Copper Point in Invermere.

Money just wasn’t available, or those who had money were being choosier about who they lent to, he said. And some developers “were reliant on there being more money to keep it afloat.”

“[It’s] like the Warren Buffett quote that you don’t know who’s swimming naked until the tide goes out,” Prentice said. “The tide kind of went out towards the end of 2008.”

The Sophia condominium project on East 11th Avenue in Vancouver was pushed into bankruptcy when cost overruns of $4 million meant the pre-sale prices asked when the units were marketed in 2005 and 2006 — between $364,000 and $689,000 — wouldn’t cover costs. When the Bowra Group stepped in, purchasers were given two options: pay more for their units or get their deposits back. About half chose to stay, half chose to go, Bowra said.

Earlier this week, the remaining units went on sale for prices starting as low as $295,000. At that price, most of the units have already sold.

“If I can buy a one-bedroom condo in the Lower Mainland for under $300,000 including GST, I think that’s a great price,” Bowra said.

Prices charged in receiverships have to be approved by the court, so they can’t be too low.

“At the end of the day, we price them to sell,” Bowra said.

“I think often receiverships do represent opportunities,” he added.

And more opportunities are just around the corner with a number of developments in receivership just a few months from completion, including the Mountaineer in Squamish and the Amadeo in New Westminster.

There are some things to think about if buying a condo from a receiver. First, the Bowra Group requires offers to be subject-free, so buyers have to do their homework and get pre-approved for a mortgage before they make the offer, Bowra said.

Also, there is no real estate commission, but the Bowra Group does pay a referral fee of $5,000 to realtors, so realtors are welcome.

One thing that isn’t different is the quality of the building, Bowra said. Under B.C. law, all developments have to provide a warranty and whatever company agrees to do that is going to ensure the quality is sound, he said.

“I think the real difference [between condos in and not in receivership] is the price,” Bowra said.

“Some people think a receivership’s a gimmick, that it’s deliberate to let people think they’re getting a deal,” Bowra said.

“The one piece of advice I would suggest to a buyer is, if you’re not sure, talk to your realtor.”

© Copyright (c) The Vancouver Sun

Amacon’s The Beasley Prices Reduced

Sunday, April 5th, 2009

Province

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