A million dollar-plus home in the Greater Toronto Area’s hot real estate market for only $700,000. A five per cent down payment. A 30-year mortgage at a 2.75 per cent interest rate. Those were the appealing terms of a real estate deal that local realtor Horace Dockery said has been circulating in Toronto’s Black community since last summer.
The offer was for pre-construction homes in developments constructed by Paradise Developments Inc. — a licensed developer currently building homes in the GTA communities of Pickering, Whitby, Brampton, Aurora and Vaughan.
Dockery said the seller — Paradise Development Homes Limited (PDHL) — had a nearly identical name to the builder, and a private lender called Empire Finance would provide mortgage financing.
To Dockery, who is Black, the terms weren’t an indication of a great deal, but rather one of several major red flags that prompted him to post a warning in a Facebook group for members of Toronto’s Black community interested in real estate.
“The numbers didn’t make sense or add up,” Dockery told CBC News. “Those are the alarm bells that sort of sent my spider senses off, and I was like, ‘There’s a problem here.'”
His post alleged a group of men were selling Paradise Developments Inc. homes but convincing buyers to provide deposits to the company with the similar name — Paradise Development Homes Limited. In his post, Dockery said anyone who gave money to that company would be “homeless” and “out a lot of money.”
“Our community is the main target,” the post reads. “If it is too good to be true, it typically is.”
CBC News conducted a monthslong investigation that revealed Paradise Developments Inc. has been trying to prevent a number of individuals and companies — including two that have used the similar-sounding name — from collecting deposits for homes in its developments.
The numbers didn’t make sense or add up. Those are the alarm bells that sort of sent my spider senses off.– Horace Dockery, Toronto real estate agent
The investigation raises concerns about who is running those companies and whether they’re doing business legally. Amid all this, questions remain for buyers whose closing dates are still months or a year away and who have collectively put down hundreds of thousands of dollars.
CBC News spoke to more than 10 people who say they either gave deposits to individuals connected with PDHL or Empire Finance, have friends or family who made payments, or who heard the sales pitch in person but didn’t invest. Most, but not all, are members of the Black community. Some raised concerns about the validity of the deals, while others believe they have legitimately purchased a home.
- If you have information about this story, please reach out to CBC Toronto at torontotips@cbc.ca and use the subject line “Developer Story.”
Most wouldn’t go on the record due to fear of losing out on the deal, fear of offending community or family members who bought in, or because they are waiting for their closing dates.
CBC News can’t say for certain if these deals are legitimate, because the buyers’ closing dates are in the future.
Companies offered low rates, weren’t registered
Dockery, who is also a licensed mortgage broker, said there is “no way” a private lender would offer such a low mortgage rate.
Ron Butler, founder of Butler Mortgage and a 27-year industry veteran, agreed.
“The concept that a private mortgage can be offered at 2.7 per cent is so ridiculous, so impossible, that they should have picked a better number,” he said.
A typical interest rate offered by a private lender over the past year or so would be in the range of 6.5 to eight per cent, Butler said.
Butler pointed out that to offer a 30-year-mortgage, a lender would need to have securitized billions of dollars worth of mortgages, something only large institutions such as banks have the ability to do.
Another red flag to Butler was the fact that PDHL and Empire Finance weren’t registered as approved lenders with the Canada Mortgage and Housing Corporation, which, under the National Housing Act, they must be in order to offer mortgages with a five per cent down payment.
Agreement warned buyers not to talk to builder
A draft purchase agreement provided to a potential buyer by PDHL for a home at the Seaton community in Pickering, Ont., where Paradise Developments Inc. is building homes, contained irregular clauses, according to Dockery.
CBC News reviewed that agreement.
The agreement lists the model for sale as “The Eaglewood” — a 2,360 square foot detached home that is one of dozens built by Paradise Developments Inc. The purchase price is $705,000, and the deposit amount is $35,250.
Dockery said when he contacted Paradise Developments Inc., he learned houses at Pickering Seaton weren’t on the market yet and hadn’t even been priced, something CBC News later confirmed.
This is information he says potential buyers would know if they contacted the builder, which the agreement reviewed by CBC tells them specifically not to do.
One clause states that the buyer risks losing their deposit if they share information about the deal or contact the builder (Paradise Developments Inc.); a section stating the buyer should consult a lawyer is crossed out.
“They don’t want you to ask questions, and they don’t want you to share it so you can be informed,” said Dockery. “That was the biggest concern for me.”
What the developer says
In a statement, Paradise Developments Inc. said it has no connection to or business relationship with Paradise Development Homes Limited or Empire Finance and that the two companies have no right to be marketing or selling its homes.
In spring 2021, the developer became aware of “illegal real estate activities and improper use” of its name, marketing and corporate materials, according to an email sent in May by Daniel Salerno, vice-president for operations, sales and marketing at Paradise Developments Inc.
“We immediately retained legal counsel and began an investigation,” he wrote.
That investigation revealed use of the developer’s marketing materials on Facebook Marketplace, he said. After Paradise complained, the platform removed the posts.
He said the developer informed police in Peel and Toronto and sent out cease and desist letters in 2021 to Paradise Development Homes Limited and another company called Estate Financial.
“Our counsel … asked that any deposits be returned to the affected purchasers or potential purchasers,” said Salerno.
He said a second round of letters was sent once the lawyers learned a new company with the name Paradise Development Homes Limited had been incorporated at the end of 2021 but with different corporate leadership.
Peel police said in a statement in May that they were investigating a situation similar to what Dockery described in his Facebook post.
A tale of two companies
Two corporations with the name Paradise Development Homes Limited have been incorporated within the last year and a half, documents filed with the Ontario Business Registry show.
The registry contains the only online documentation for either company. CBC News could not find a website or social media account associated with them.
The first PDHL was incorporated in February 2021, with an individual named Hassan Zafar as its sole director, according to its articles of incorporation.
That company changed its name on Oct. 28, 2021, to Dezi Cars and Autobody Limited and then to Dezi Development Corporation on Feb. 16, 2022, registry records show.
Paradise Developments Inc. told CBC News that in 2021, it petitioned the provincial ministry responsible to force the name change. A spokesperson with the Ministry of Public and Business Service Delivery confirmed this.
A new, separate company called Paradise Development Homes Limited was incorporated on Dec. 24, 2021 — two months after the first changed its name.
This time, the company listed a different director on its incorporation documents — Conan J. Hamdani, a 38-year-old Milton resident. In June, at an unrelated plea hearing, an Ontario court judge called Hamdani a “career fraudster.”
In 2008, Hamdani was sentenced to 31 months in jail after he and his father were accused of producing and possessing fake passports, traveller’s cheques and money orders. In the 14 years since, he has been charged with multiple criminal offenses including fraud, most recently in June 2022.
While there is no public link between the two PDHL companies, CBC News has uncovered a connection.
Purchase documents obtained from the online incorporation company hired to register the second firm show Zafar placed the order to…
Read More:Is a GTA real estate deal that sounds like paradise too good to be true?
2022-08-29 16:10:25
