Urban corp restructuring leaves hundreds of hopeful homeowners in limbo

Three years ago, Loraine Adal-Salmon, who works in hospital administration, and her husband Anthony Salmon, a medical technologist, pooled their savings and put an $82,000 deposit on a three-storey semi-detached house with a finished basement and back yard that Urbancorp Inc. agreed to build them at the site of a decommissioned public school in midtown Toronto.  Urbancorp said it would give them the keys to their $810,000 home at the end of 2016.  Today their dream, and those of many other homebuyers, lie in ruins. Urbancorp, beset by creditors in Israel and Canada, has filed for protection for some of its properties under the Companies Creditors Arrangement Act, and to restructure other properties under the Bankruptcy and Insolvency Act. A judge has approved a plan to sell the land intended for the couple’s home (and 64 other homes), possibly to buyers in China. The couple now appears unlikely to get a house, or even to get back all of their deposit.  Meanwhile Alan Saskin, the owner of Urbancorp, appears to be seeking a way to  emerge from the court process in control of his development company.  “It’s pretty disgusting,” says Loraine. “You’re not getting anything.” At heart of the couple’s troubles is a detail of real estate law, spelled out in a report last month by that KSV Kofman Inc., the court-appointed monitor of the Urbancorp restructuring.

Tyler Anderson /  National Post

Tyler Anderson / National PostMany families will lose more than half their deposit and, more importantly, won’t get a home.

Under the category, “deposits by home buyers,” KSV writes, “The companies did not hold the deposits in trust — they were spent prior to the commencement of the  proceedings. As these are not condominium projects, there is no legislation requiring deposits to be held in trust.”

Loraine and Anthony have two daughters. Olivia is six and Isabel is four. The girls today share a small bedroom in the stacked townhome the couple owns, and had dreams of their own rooms. On his daughters’ PD day in the winter, Anthony took them to watch the much-delayed demolition of the school, to make way for houses.

“We spent the whole day there,” Anthony recalls.

Urbancorp flew high for years, and used deposits from some homebuyers to buy more land, including five other surplus school sites. Then the company needed more cash. Around the time of the demolition, Saskin went to Tel Aviv where he raised $60-million in bonds on the Israeli stock exchange.