Buyers lost thousands in an alleged real estate scam. Now some are getting money back

They lost their savings in an alleged real estate scam. Now, some unexpected relief

Deposit reimbursement could set precedent for dozens of other victims, says lawyer

Why Tarion is reimbursing some victims of alleged GTA real estate fraud

A year ago, Janet Campbell thought she'd never get her savings back after losing nearly $30,000 in an alleged real estate scam and spending the rest of her savings on short-term housing when the home she'd planned on didn't materialize.

But in an unexpected development, there's some good news for Campbell and others. The Brampton, Ont., grandmother is one of several victims of the same alleged fraud scheme who have received partial reimbursements from Tarion, the organization that administers Ontario's new home warranty program. In Campbell's case, she was reimbursed $15,000, which she says has helped her to pay off bills that had accumulated.

"I thought that I would just lose everything," Campbell said. "I'm really grateful that I did get some money back."

Campbell's lawyer, Andrew Ballantyne, calls the Tarion decisions "a huge win," and says the development could set a precedent for dozens of other fraud victims.

Tarion is a non-profit organization created by the provincial government that backstops warranty coverage provided by builders for all new homes in Ontario.

Alleged fraud scheme dates back several years

CBC Toronto first reported on the alleged fraud scheme, which primarily targeted members of Toronto's Black community, four years ago. It involved Moiz Kunwar allegedly taking deposits for pre-construction homes he did not have the right to sell and that were being built by unrelated, legitimate developers.

In some cases, buyers lost their life savings on homes that never materialized.

"These aren't wealthy investors who have lost a deposit on their 13th property. These are everyday people who had a dream of owning a home," Ballantyne said.

Kunwar, 29, is now facing numerous fraud charges, which are still before the courts, along with civil lawsuits.

In a statement of defence filed last year in one of the civil claims against him, Kunwar denied all allegations of fraud and denied ever representing himself as a real estate investor, broker, developer or mortgage lender.

Tarion reimburses 7 buyers more than $300K

That civil lawsuit involves Campbell and six other complainants, who are represented by Ballantyne.

Following a CBC story last year, Ballantyne said he received calls from more than 100 additional buyers who say they were duped by the same scheme. He said he also heard from Tarion's chief operating officer, who suggested there might be grounds for reimbursement claims — something Ballantyne said he hadn't considered.

"I was a little surprised. I didn't think that Tarion would be willing to potentially even consider covering a loss like this," Ballantyne said, since there was never an actual developer involved in the transaction.

Tarion's new home warranty program includes deposit protection. If a builder goes bankrupt or fundamentally breaches a purchase agreement, the buyer's deposit is protected up to certain limits — 10 per cent of the purchase price for homes over $600,000, up to a maximum of $100,000.

After speaking with Tarion, Ballantyne submitted claims on behalf of 12 of his clients, seeking more than $500,000 in reimbursement. So far seven of the claims, including Campbell's, have been approved, four have been denied and one is still pending. The approved payouts total more than $300,000.

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The decision letter for Campbell's claim finds that she entered into a home purchase agreement with a vendor, the home was not delivered and she did not receive a deposit refund. Tarion found she therefore met the criteria for deposit protection, despite the fact that the vendor — Paradise Development Homes Limited — is not legally entitled to build homes in Ontario.

Tarion declined CBC Toronto's request for an interview. In an emailed statement, spokesperson Andrew Donnachie called the case "very unusual."

"In evaluating any claim submitted to Tarion, we have to look at the specific details and the requirements under the Ontario New Home Warranties Plan Act," Donnachie said.

He also said the case "highlights the importance of new home purchasers making sure that they are dealing with a licensed builder who has been approved to sell homes."

Earlier this year, Tarion launched a program aimed at catching illegal actors sooner. Buyers are now required to register their purchase with Tarion within 45 days of signing an agreement of purchase and sale.

Buyers who don't register with Tarion will still qualify for coverage, but through a separate fund capped at $15 million annually.

Ballantyne says the Tarion reimbursements for his seven clients offer hope to dozens of other affected buyers, but he hopes to expand the precedent further.

One of his clients' denied claims, reviewed by CBC Toronto, indicates that the deposit was paid in two parts — directly to Moiz Kunwar and directly to a numbered company — neither of which matches the name of the vendor on the agreement of purchase and sale.

Ballantyne says payment "irregularities" are a recurring issue for many of the alleged fraud victims. He estimates about half of the more than 100 purchasers he's in touch with made payments to a third party and therefore would likely also see their claims denied.

Ballantyne says he plans to appeal at least three of the denied claims at the Licence Appeal Tribunal, arguing Kunwar and the fraudulent companies he allegedly represented are one and the same.

"It seems obvious to me that there's a clear link between these entities. And it seems to me the result of sticking to this rigid, narrow interpretation of what the vendor is, is going to lead to half of the people not being able to receive their reimbursement," Ballantyne said.

He estimates the lost deposits from the buyers he's in contact with total at least $4 million.

Sarah MacMillan is a journalist with CBC Toronto. She previously reported in Sudbury, Ont., and Prince Edward Island. You can contact her at sarah.macmillan@cbc.ca.