Earlier in August, it was revealed that a presale condo project in North York was in trouble. In fact, it was in dire trouble last year as it was sold through a court order. However, the 141 people or so who put down 40K to 700K back in 2010, didn’t know until now. Unfortunately, the lawyer released all the deposit money to the developer by mistake and he skipped town. We are talking about 14.9M. Soon after the story broke, the lawyer filed for bankruptcy.
One can argue that anyone can fall victim to real estate fraud if the realtor/developer and the lawyer are working together and that it is not only in a pre-sale situation. I would say it is less likely for someone to risk their career and commit to living a life in hiding for the price of a single house.
For a large condo project, the score might be worth it. I am sure with around 15M, if you plan it right, you will never need to work again while the victims might have to work late into their retirement years.
This might be an extreme example of the dangers of pre-sale condo, but the advice is still the same. Bring a good realtor with you. Besides explaining all the terms of the agreement for you, he/she would have been able to tell you whether the developer is well known or not. For other reasons why I don’t like pre-sales see “The Cons of Pre-sale Condos”.
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