By Staff
November 30th, 2022
BURLINGTON, ON
Adi Developments announce today that a settlement of all outstanding regulatory issues has been reached with the HCRA. Tariq Adi, CEO of Adi Developments, said, “We are happy to have this behind us and look forward to completing our existing projects and bringing more high-quality homes and communities to the Greater Toronto Hamilton Area (GTHA) market.”
Adi Developments, a developer with a 15-year record of building successful housing projects in the GTHA, was notified of the HCRA’s intent to revoke Adi’s building and vending licences on August 25th, 2022. Adi appealed this to the Ontario License Appeal Tribunal.
At the same time, Adi initiated discussions with the HCRA aimed at resolving the issues outside of the appeal process. Today’s announced agreement is the culmination of those discussions.
The settlement encompasses the following key elements:
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(i) The resolution of all issues in the HCRA’s proposal to the satisfaction of all parties. |
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(ii) No findings or admissions as to any Adi entity having provided altered or false information or documents to the HCRA nor as to any Adi |
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(iii) An admission by one of the Adi entities, Adi Lakeshore, that it failed to return purchaser deposits within 10 days of cancellation as it was benefit component represents the total amount of interest that Adi Lakeshore had already begun paying to affected purchasers starting in |
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(iv) The return of all deposits to affected purchasers, which Adi Lakeshore completed on November 14, 2022. |
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(v) Most importantly, all current and future Adi companies licensed by the HCRA can operate as builders/vendors subject only to mutually agreed upon conditions on their licences. |
The Nautique: currently under construction
The Lakeshore project at the centre of the HCRA’s action was the first cancellation in Adi’s 15-year history, driven by a dramatic increase in construction costs which seriously jeopardized the project.
“These are unprecedented times for the development industry,” said Tariq Adi. “We were facing cost escalations in the range of $43M which the project simply could not absorb. As a result, we had to seek additional financing and reconfigure the project in order to be in a position to complete it. Regrettably, however, the situation forced us to cancel purchase agreements, which we hated to do because our customers are the most important part of our business.”
For purchasers who opted to stay with the Lakeshore project, Adi mitigated the impact of the cancellations by allowing them to re-purchase their units at approximately 20% below market prices and crediting them with $10,000 per unit in décor dollar upgrades. The project is currently 85% sold with construction actively underway and going strong.
For purchasers who opted not to enter into a new purchase agreement, Adi, as a gesture of goodwill, began paying them 6% interest on their deposits in May 2022, something Adi did not have to do. This will result in more than $2,500,000 being paid directly to affected purchasers.
Stephen White
They get to do it because the mutually agreed to and signed contract contained terms that allowed ADI to do just that. One might say the purchaser should have insisted on compensation terms being included. But at the time in the market cycle the purchaser had no leverage.
Maybe the Doogie Fraud government and the HCRA should be mandating purchaser protective provisions be included in purchase/sale agreements.
“Below market price and $10,000 in decor costs. So kind and thoughtful of
Adi. Yeah, Right.
Ms Hersh, it’s likely Adi’s construction financing term had expired. When arranged the term would have contemplated the then planned date to complete construction. Lenders likely required considerably higher interest rates because rates as we all know have increased substantially since the project was “sold”.. Then of course material costs have also increased. These are probably some of the reasons.
It’s nice that ADI eventually gave purchasers who withdrew a 6% increase on their deposits, and considerate that they finally allowed owners to re-purchase their units below market prices, and threw in $10K for decor. However, in what universe does a developer, or any business for that matter, get to arbitrarily alter the terms and conditions of a signed contract without the other parties’ express permission?
I’m very sorry that ADI faced a $43M increase in their project costs, but that’s life. Developers operate in a high risk/high reward environment, and if they aren’t prepared to withstand market fluctuations then that’s just tough and too damn bad. There are many businesses who signed contracts previously and have experienced market downturns but you don’t see them reneging on their contractual obligations to their customers.
The penalty that ADI had to pay was basically a slap on the hand. In the end the only winner was ADI. They were able to break sales contracts and increase the prices of their units. The $60,000.00 penalty along with the $2,500,000.00 paid out in interest will not even amount to perhaps loosing the profit on 2 of their units in the building.
The buyers who purchased the pre-construction units ( which allowed ADI to secure bank loans) are the victims.
There are other developers in Burlington who were in the construction phase of their developments at the same time who did not do this. They had to deal with the same escalation of costs.
So the question to ask why did ADI have to do this? What don’t we know?