Laval police investigate after homebuyers lose millions when real estate developer goes bankrupt

LAVAL, Que. -

After speaking to some 20 families who lost millions in deposits when local real estate developer Bel-Habitat went bankrupt last week, Laval Mayor Marc Demers is promising support.

"Given the magnitude of the situation, we have asked the general management to look at the tools we have available to help you," he said at a July 6 city council meeting.

The Laval police department has opened an investigation and the mayor said "no effort will be spared" to shed light on this "unprecedented drama."

The company was incorporated in 2010 and its majority shareholder is its president Luc Perrier.

Among the 234 unsecured creditors are more than a hundred buyers whose down payments total $18 million of the $26 million swallowed up in this bankruptcy, said one of the victims, Henri Tang. "Life savings" went up in smoke on June 28 after Bel-Habitat's bankruptcy, he said.

"There are at least 66 families who put down more than $100,000 in deposits," he said. Between them, they lost $14.5 million, which corresponds to an average down payment of $220,000. According to Tang, the developer-builder encouraged buyers to put down large down payments in return for discounts of 8, 10 and 15 per cent, depending on the size of the down payment.

Bel-Habitat was accredited to the mandatory warranty plan administered by the Residential Construction Guarantee (RCG), the regulation respecting the warranty plan for new residential buildings that limits the coverage on down payments to $50,000. Tang is criticizing the fact that this information does not appear "anywhere in the preliminary contract of the RCG" that the builder makes buyers sign.

The RCG is reminding consumers to not make a down payment exceeding  $50,000.

The organization, designed to oversee protection for purchasers of new-construction homes, has met with 125 consumers, helping them open a file of complaint and answer their questions.

Affected consumers who have questions or items to submit should contact RCG's customer service at 1 855-657-2333.

RCG has also set up a toll-free hotline for consumers who need psychological support. The number to call is 1-800-661-8193.

"We will do our utmost to accompany and protect consumers affected by this unfortunate situation, in accordance with the criteria set out in the regulation. We intend to be in constant communication with them," said Daniel Laplante, president and CEO of RCG, in a press release. “It is an extremely difficult context in which these people are and we could feel their sadness, even their distress."

This is the largest file handled since the creation of the Residential Construction Guarantee six years ago.

CHASING THE WRONG PEOPLE

Twenty-seven days before Bel-Habitat declared bankruptcy, Tang denounced at a June 1 city council meeting the five years of delays to issue a municipal services connection permit to complete des Abeilles Street in Vimont, where his home was to be developed in 2018.

"It's taking longer than the Champlain Bridge, the Turcot Interchange and possibly longer than a global pandemic," he said. This housing development project was set to contain 24 houses and was swept away by bankruptcy.

"Is it normal that after five years, no one is able to give a firm date as to the end of this process," he said, adding that the first of four interventions during question periods at the municipal assembly was on May 7, 2019.

"I was already reassured that it was only a matter of months. But that was a speech from over two years ago. I have lost faith in the process. All I found was anxiety and misunderstanding. I hope to find a way to rebuild that trust."

Mayor Demers responded that the contractor did not "meet all the requirements for a permit" and that the contractor was well aware of the situation.

"I've been chasing the city for over two years," said Tang, noting that if he had known "Bel-Habitat was the problem, I would have taken my money out a long time ago. Imagine, I signed up in the summer of 2017!'

 - This report by The Courier Laval and Local Journalism Initiative was first published in French on July 9, 2021.