appendix-Print-Factory

Printing Factory Lofts—construction defects

Here is an example of why potential buyers need to be very careful and knowledgeable when buying a condo unit. Not all Realtors and extremely few owners will inform you of defects with either the unit or the condo corporation. Most of the time, they will deliberately hide problems.

The Printing Factory Lofts is an eight-storey, 256 unit condo conversion at 201 Carlaw Avenue in South Riverdale that was registered in 2010.

In April 2011, the engineering company issued a Performance Audit that found defects and deficiencies resulting from incomplete and inadequate work with:
(a)       roof system;
(b)       exterior wall system;
(c)       structure/parking garage;
(d)       ceilings;
(e)       walls;
(f)        floors;
(g)       doors;
(h)     miscellaneous interior;
(i)        site elements;
(j)        mechanical and electrical equipment;
(k)      portable water systems;
(1)        fire suppression systems;
(m)       fire alarm system;
(n)        heating, ventilation and air-conditioning;
(o)        power supply and distribution;
(p)        lighting;
(q)        emergency power;
(r)         elevators;
(s)         security;
(t)      garbage disposal;
(u)         amenities;
(v)         roof anchors;
(w)        windows and exterior doors;
(x)         water, moisture and air penetration;
(y)         installation;
(z)         cracking in exterior wall, dry wall and ceilings;
(aa)      balconies;
(bb)       sound/noise attenuation; and
(cc)        miscellaneous, other issues.

A Performance Audit is not included with the Status Certificates but a potential buyer, and the existing owners, can request to inspect it.

The Status Certificates did state that the condo corporation was suing the builder and a number of contractors over construction defects.

The condo corporation filed a Notice of Action dated May 11, 2012 to recover damages related to construction deficiencies. The Plaintiff repaired the construction deficiencies and its consulting engineers issued a report dated November 6, 2015 containing findings and conclusions with respect to the causes of the construction deficiencies.

The engineering report stated:

(a)	a number of deficiencies are caused by poor design and poor workmanship;
(b)	a number of areas of TSCC 2073 were not constructed in accordance with the Ontario Building Code;
(c)	Some of the deficiencies should have been identified by construction review at the time of original construction; and
(d)	If the deficiencies were left unrepaired, they would result in concrete deterioration and unsafe conditions posing a real and substantial danger to the future occupants of the building.

A Globe and Mail article described the uproar when a Realtor wrote about a client who could not get mortgage insurance on a unit so the sale fell through.

Real estate agent David Fleming caused a brouhaha when he wrote last week about his client’s attempt to buy a unit at the Printing Factory Lofts – only to have the deal fall through.

In this case, some agents have taken exception to what they view as a negative opinion that would have been better kept quiet. One called him “reckless” and hinted at legal repercussions.

Here is that article.

Problems at The Printing Factory Lofts?
Toronto Realty Blog (abridged)
David Fleming
29 January 2014

I love this building, and I’ve been pumping up this area for quite some time, but if 201 Carlaw Ave is now on the “don’t insure” list by the three major Canadian mortgage insurers, it means buyers have no choice but to stay away…

My client was making a down-payment of less than 20%. This means that the rest of the mortgage had to be insured, and that’s where the problems started.

CMHC would not approve the mortgage for the property at 201 Carlaw Avenue. The lenders were eager to lend (Scotia, TD, and BMO were fighting over the business), but it was all a moot point.

Joe then called his contacts at Genworth and CG, and both of them turned down the deal as well.

Mortgage insurers have a proverbial “Sh!t List,” for lack of a better term (although if this is indeed what they call it, then why not tell it like it is!), that consists of condominiums that they simply will not provide mortgage insurance for.

201 Carlaw Avenue happens to be on these dirty lists for all three of CMHC, Genworth, and CG.

What that means, in case I’m not making it abundantly clear, is that no unit at 201 Carlaw Avenue can sell unless the buyer has a 20% down payment.

And that spells major, major trouble for this building.

By now, you’re probably all wondering WHY this is, and let me address that.

The mortgage insurers already knew what we were about to find out by reviewing the condominium’s Status Certificate, and that is the following…

The 2011 Reserve Fund Study showed significant budget shortfalls, and it was suggested that contributions to the reserve fund increase significantly, with a whopping 43% increase slated for 2013.

On November 28th, 2012, the condominium corporation at 201 Carlaw Avenue enacted a by-law that allowed them to borrow $2,000,000 in cash, without further approval of the unit owners.

On April 13th, 2013, a letter was sent to all unit owners that detailed the following:

“The Corporation took out a $2 Million loan from Laurentian Bank which was meant to top the Reserve Fund and help pay for various repairs, many of which the Corporation believes result from original construction deficiencies. As a result, the Board of directors considers that the Reserve Fund is now adequate, and has decided not to follow the Reserve Fund Study circulated to all owners in 2011.”

They also noted:

“Legal fees have increased in order to fund the legal action the corporation has commenced against the developer, the architects, and the City of Toronto.”

Whoa.

It is not uncommon for condominium corporations to sue the developer of the building – this happens all the time. It’s not the litigation that concerns me, or the lawyers.

It’s the fact that the condo corporation took out a $2,000,000 loan, with interest, I might add.

But it gets worse.

There’s $1.6M due in a balloon payment in 2018 when the loan expires.

They’re going to use this money for repairs – I get it. But where do they get the $1.6M in 2018?

In the end, it doesn’t matter to me. Or to any of you really.

It’s such a shame, because this is a gorgeous building, in an area that has truly taken off in the last few years, but if a mortgage insurer won’t provide insurance, then units really can’t be bought and sold with the ease we’re accustomed to in Toronto.

I mean, sure, you could buy a unit here if you had 20% down.

But would your lawyer approve this mess?

Comments
The comments from the residents of The Printing Factory Lofts show the reaction from some owners when they feel that the values of their units are at risk. I read denial and outrage in Comments that Mr. Fleming received.

Theresa Martel   February 14, 2017
I just (Feb 2017) tried to put an offer on a 2bed unit at PFL. CMHC still will NOT insure mortgages in this building. Just wanted everyone to know this is still an active and significant issue.

I’m a bit surprised that seller’s don’t have to disclose more of this information.
My Realtor and I had to do our own digging to get to the bottom of it all.
Good luck everyone.

Frank Ilulio   January 28, 2016
Please note that David Fleming is now in front of the courts for fraudulent representation. This is a Toronto broker that has been making comments about several developments across the city to boost his own profits. David Fleming is a fraud and will face jail time over making false accusations on several properties throughout the city of Toronto.

Sara   September 12, 2015
I bought in the building a while ago now, in spite of this article, and have been very happy with my purchase. Love my unit- exposed brick, high ceilings and more square footage by far than anything else in my price range. I also love the variety of layouts I’ve seen in other units and the fact that the population of the building ranges from babies to retirees. Best of all, my unit is super quiet. My neighbors have a toddler who seems to be screaming and crying every time I step into the hallway, but I hear nothing through the walls.

I am expecting the special assessment (I am not optimistic about winning litigation, especially against a developer with deep pockets), and took it into consideration when purchasing.

Jane   July 10, 2015
I tried to buy a condo in this building a couple of months ago. The unit was sitting from December to May- it got reduced from $340 to $300k, and eventually sold under that. Everyone who tried to buy it before us got rejected, and those who had 20% for a down payment walked away because of the lawsuit. I feel like I really dodged a bullet there.

PFLbuyer   December 11, 2014
@ PFL22, I’m currently looking to buy a unit at PFL but was told that CMHC will not insure my mortgage unless it’s 20% and I’ve already been declined by two major banks due to the status of the building. Can you tell me which lender approved your mortgage? Thanks.

Karen   April 26, 2014
It’s unfortunate, it’s a very nice building, and yet everyone is trying to sell they’re unit. Now some banks don’t even want to lend even with 20% down… And sellers want to keep it all hush hush.. Buyers deserve to know of the shady situation !

Adrian Sebu, RCM   April 3, 2014
Property Manager
David was so wrong in many aspects with respect of this building. Besides the fact that he never sold a unit here, although he claims this being his one of favorite buildings(???), he presented the status of the building in an erroneous way. The information from the status certificate he presented, was interpreted wrong and incomplete. Should anybody be interested in the real status of this building, although the owners know it, please call me at the management office 647-340-4291. He can say whatever he wants here and he won’t lose his job, I cannot lie, as my job is in jeopardy.
Regards,

Jon   March 31, 2014
David, can you please remove this blog finally? Now when you Google the buildings name this is the first thing to come up. Any interested buyer is now skeptical, no matter their financial situation is, what gives you the right? I wonder if you have called all the selling agents in the building and asked them how much financial distress you have caused all of them, and how much lower the units are now listed for? We have had many buyers with OVER 20 % down back out with cold feet, mainly due to THIS blog. Or, just find me a buyer and write me cheque for difference of the money I stand to lose. Fair?

I do not think you know how much this blog is affecting many peoples lives.

PFLballer   February 13, 2014
I am a PFL resident and I deride the voracity of this post. Airing our dirty laundry only serves to inform buyers – buyers who could otherwise be helping us move to single-family homes, which is good for the economy at large – the virtuous circle of home ownership. For shame David Flemming – why don’t you pick on a building your own size? I may not have a law degree, but I did study law for 5 years at TWO universities – I believe that if David is being paid by underhanded forces to slander the building, he has a duty to inform us. I didn’t want to play this card but I am connected to the Deputy Mayor of TORONTO – he can see to it that your blog is annexed from the city limits. Good luck driving to Vaughn every day to update it. I don’t like threats but just be weary of your actions.

Just you know   January 30, 2014
David, you’ve just poked a hornet’s nest. This is a building filled with very educated, very connected individuals. Several of them have law degrees. It is unlikely that whatever traffic you will drive to this site with this post will justify the grief that they will cause you. The smart thing would be to take down this post spend your time more productively, perhaps by helping your clients.

Questioning Motivations   January 30, 2014
I really am questioning the motivations David and others on this tread. You have to wonder if perhaps this an attempt on from of the developer (and/or lawyers representing the developer) to put pressure on the PFL board to settle the lawsuit through arbitration, and for less than they wanted. All it takes is a bit of misinformation (or perhaps money) to an ego driven real estate agent who writes a blog, and then follow up with some comments that can’t be tracked to an individual.

Sadly, the people doing this for their own benefit don’t seem to care about the many residents who live in this building. They are real people, many with families, and they are just being thrown under the bus.

Reply
David Fleming   January 30, 2014
@ Questioning Motivations

Okay, you got me.

The developer paid me $1,000,000,000,000 to start a blog back in 2007, update it 4-5 times per week for seven years, all in order to post a blog in 2014 whereby I detail a situation I had…..in 2014, where my buyer and I unearthed a mountain of problems at a Toronto condominium. And yes – all 65 comments posted on today’s blog were from ME, from different computers around the city of Toronto.

(ahem)

I’ll be honest – out of the 22,487 comments posted on this blog in the last seven years, this is without a doubt, the dumbest.

I’m embarrassed for you right now.

Mel   January 29, 2014
Ummmm… how do you have our Corporation's private financial statements circulated to residents? And exactly why are you publishing this on the web? Also judging by the amount of real estate agents traipsing people in and out of our building all of the time, and the amount of time units in our building are on the market, I think you may have incorrect information. From what I can see in your “blog” there is a whole bunch of second-hand whispering that has lead you to these conclusions. By writing these things you are hurting those of us that own in the building. You are not privileged to our private AGMs, and do not have all of the information.

As a resident I will be contacting my litigator, as you are causing me financial harm with your “blog”.

Lessons from all of this?

•	Ongoing lawsuits in themselves is not a deal stopper but they do mean that a buyer must show extra caution. If it is construction defects, read the Performance Audit.
•	For any lawsuits that seem serious, go to the courthouse and read the applications and the defendant's response.
•	You can still put in an offer to purchase but your asking price should reflect any increase in financial risk.
•	Lawsuits can take a long time to settle. This particular lawsuit is still ongoing (summer of 2017).