Markham homebuyers who pre-purchased condominium townhouses in the Mackenzie Creek development back in 2016 have found themselves in the middle of a shareholder dispute that continues to escalate, with no indication of when buyers will actually have their homes built.
All units of the townhouse condominium development, located at 9900 Markham Rd., were sold to presale buyers in 2016, according to The Globe and Mail, but construction on the building hasn’t yet begun thanks to a dispute among shareholders who appear to be fighting for control over the project’s development company CIM International Group Inc. Usually buildings begin construction soon after pre-sales end, with most buildings taking between one and four years to complete. Three years without any construction activity is very unusual.
According to the Globe and Mail, shareholders of CIM have recently been sent several notices with regards to investments on three of its properties, of which Mackenzie Creek is one.
It’s not unusual for pre-purchased condo developments in the GTA to stall because of financial setbacks. And buyers are encouraged to do their research before locking into a pre-construction sale.
But CEO David Morrison of Morrison Financial Mortgage Corporation, the senior lender on the project, told the Globe that the developer isn’t strapped for cash; it’s that shareholders can’t agree on how to proceed.
“My sense is they are all good people,” said Morrison, “but there’s some kind of dispute here and the buyers have sort of gotten in the middle of it. I don’t think anyone is trying to defeat the buyers or take advantage of them.”
CIM issued a statement on the situation Thursday morning, confirming that the delay is not due to financial issues but instead due to a company called New Silk Road (NSR)’s refusal to approve elements of the project in a timely fashion.
The two main players in the dispute, the Globe reports, are Jiubin ‘Jerry’ Feng, the former CEO of CIM, and a Beijing-based company called Macro-Link Holding Co. Ltd, which backs NSR.
According to the Globe, NSR announced in 2017 that it had invested $31-million in the Mackenzie Creek project in exchange for a 51% stake.
Markham City Councillor Amanda Collucci told the Globe that “Macro-Link is supposed to be the investor – more like a silent partner. I don’t know what happened, but it seems like one tried to take over the other.”
CIM is now claiming that NSR has failed to do the following: “failing or refusing to sign cheques to secure building permits; failing or refusing to sign contracts to retain sub-trades; and terminating key project management employees.”
“NSR is now attempting to profit financially through a quick sale of the project for significantly less than fair market value and is not acting in the best interests of purchasers who have bought townhouse units in Mackenzie Creek,” the release states.
CIM says it’s taking all legal action available.
“Our priority is to ensure the 141 townhouse units of the Mackenzie Creek development are built and delivered to purchasers as promised,” said Morrison. He also told the Globe that his company has lent as much as $71 million to finance the project, but that CIM has used only $16 million of it.
“The issue’s not money,” he said. “They have all the money in the world.”