Angry purchasers and a jilted real estate brokerage sue Dundurn condo owner Denis Vranich

Angry purchasers and a jilted real estate brokerage have filed separate lawsuits against the owner of a Dundurn Street building after a planned condominium conversion project was axed one day before the deals would become official.

A group of 32 individuals and corporations that purchased units in the converted industrial building at 220 Dundurn St. S. is seeking $6 million in damages from Denis Vranich and three of his companies for breach of contract and acting in bad faith for allegedly terminating the sales agreements on Dec. 30, one day before the conditions on the deals were due to expire.

Mint Realty, a Waterloo-based realtor operating as Condo Culture, is seeking $2.1 million in damages in a separate suit for sales commissions allegedly owed that weren't paid out because the agreements were terminated prior to closing.

Vranich denied any wrongdoing in a statement provided by a law firm that has acted for him in other matters.

The owner has acted in accordance with the terms as set out in the contracts and looks forward to confirmation from the court," according to the statement provided on Vranich's behalf.

None of these allegations have been tested in court.

Vranich, the son of major Hamilton developer Darko Vranich, purchased the 1.6-hectare property in 2007 for $1.5 million.

Originally constructed in 1928 by National Hosiery Mills to manufacture silk stockings, the property near Main Street and Highway 403 was acquired by the Hamilton Board of Education in 1967 for use as a vocational training centre, storage and a film library and then declared surplus in 1996.

Over a number of years, Vranich developed the property into a 124-unit apartment building and a few years ago he decided to convert the property to a registered condominium and sell the units, according to the statements of claim.

Vranich retained Condo Culture as the listing brokerage for a large number of the units and Condo Culture states in its court filings that it ultimately agreed to Vranich's request to accept payment of all commissions when the deals closed.

Through 2018 and 2019, some of the units were purchased by investors, some of the units were purchased by people looking to live in their units and some of the units were purchased by tenants already living at 220 Dundurn St. S.

Most of the units in the purchasers' lawsuit were bought for amounts in the low $300,000s, with a couple in the $400,000s and one at $523,400.

Tenants who purchased their units and investors who had tenants living in their units prior to the closing of the sales were allegedly told that up to 10 months of rent payments would be applied to reduce the purchase price once the deals closed.

According to the statements of claim, there were two conditions on the purchases that had to be fulfilled by Dec. 31 for the deals to close - the city had to approve the condominium conversion and Vranich's company had to have at least 90 firm purchase agreements in place.

Last September, the city approved the conversion and the building was registered as Wentworth Standard Condominium Plan No. 585 on Sept. 12.

The only condition remaining was the firm sale of at least 90 units by Dec. 31.

In July 2019, a large sign was erected in front of 220 Dundurn St. S. stating the building was over 95 per cent sold" and the same information was posted on the building's website, according to the statements of claim.

If true, that would have represented at least 118 sold units, well beyond the threshold of 90 sales needed to satisfy the final condition.

The Condo Culture lawsuit alleges that by Aug. 20, Vranich had assured the brokerage 120 of the units had been sold.

Instead, the prospective owners of the units received an email on Dec. 30 indicating the sales agreements were terminated due to the vendor being unable to secure 90 firm purchase agreements," according to the purchasers' statement of claim.

Mitch Taylor said he was speechless" when he read the termination notice.

Taylor is a Kitchener-based realtor who also worked at one point for Condo Culture selling units at 220 Dundurn.

He purchased three units himself and a fourth unit jointly with his father. Some of his real estate clients also purchased units in the building.

Once the termination notice was delivered, my business reputation took a massive hit," Taylor said in an interview.

To be honest, I thought it was a joke maybe from some of my former colleagues who I'm friends with," said Taylor. I was in disbelief.

From my perspective, it was seven figures of real estate that just evaporated in the blink of an eye," he said.

I saw the reason at the end of the termination notice and I thought That's not right.'" Taylor said he believed they had sold enough units to commence closing.

Chris Hinchcliffe had lived at 220 Dundurn until he found a house he liked around the corner. When he moved out, he purchased one of the units.

The unit had a tenant paying a little over $1,400 a month in rent and Hinchcliffe said he was told 10 months of the rent - a little over $14,000 - would be applied to his purchase price once the deal closed.

He remembers the email arriving while he was at a party with friends. He assumed it was confirmation that the sale had closed.

I was shocked," Hinchcliffe said. I work in the area. I live in the area. I saw that sign every day.

I was immediately suspicious and I thought That doesn't make any sense.'"

As the purchasers began to investigate what had happened, they discovered something odd.

On Dec. 23, the property, all of the units, storage lockers and parking spaces were sold by one of Vranich's companies to a numbered corporation he is also alleged to own.

A corporate search shows Vranich as the sole officer and director of the numbered corporation, according to the purchasers' statement of claim. Vranich did not respond to a request to confirm he is the owner of the numbered corporation.

At this point, they've sold the units to two different purchasers," said Andrew Francis, a lawyer representing the purchasers in their lawsuit.

The purchasers point out in their statement of claim that if all 124 of the units were sold on Dec. 23 from one Vranich company to another, the final condition of at least 90 firm sales must have been met.

After the purchases were terminated, the purchasers allege they were eligible to receive their deposits back if they signed a release, but they would not receive any interest. They also allege they lost out on any increase in value of the units as well as any equity that would have been applied to the purchase price.

The purchasers' lawsuit alleges Vranich and his companies conspired to avoid their obligations under the agreements to complete the sales of the subject units to the plaintiffs in favour of a more lucrative deal."

The purchasers are also seeking three orders in their statement claim - an order that their purchase agreements are firm and binding, an order setting aside the transfer of units between Vranich's companies, and an order that the transfer of units between the two companies is null and void.

Taylor said the experience has caused him a tremendous amount of emotional, mental and physical stress.

This has taken a massive toll on me and my family," he said.

Hinchcliffe, meanwhile, said the whole thing was just very, very frustrating."

I'm really excited about the growth that's going on in Hamilton," he said.

It's a little bit frustrating if this is how it's happening and this is the kind of thing that's going on."

Steve Buist is a Hamilton-based investigative reporter at The Spectator. Reach him via email: sbuist@thespec.com