Here’s What Can Happen to You When You Challenge Property Buyers to Fund 100 Homes

Published on April 2, 2016 Graeme Cox, a 32-year-old real estate broker in Toronto, wants to diversify from a floundering real estate market that is plagued by high vacancies and sluggish sales. On February…

Here’s What Can Happen to You When You Challenge Property Buyers to Fund 100 Homes

Published on April 2, 2016

Graeme Cox, a 32-year-old real estate broker in Toronto, wants to diversify from a floundering real estate market that is plagued by high vacancies and sluggish sales.

On February 26, Mr. Cox signed up to purchase 100 homes — $48.5 million worth of homes — through the Realty Vision Canadian Buyer’s Club, a crowdfunding website that is the latest business venture from Greg Ciavarella, a real estate investor and auctioneer from Queensbury, N.Y.

Mr. Ciavarella said he recently bought 20 properties through the club and Mr. Cox had just been signed up. Mr. Cox is an amateur angel investor and signed an NDA to keep his identity a secret, Mr. Ciavarella said.

The sales agency at the front of the website advertises, “Your chance to invest directly in the real estate market. Get on top of Canada’s hottest housing.” But Mr. Cox’s identity has caused some headaches.

In a chapter of the complaint Mr. Cox filed against the website, he accused Realty Vision of violating the Companies Act of Canada for a breach of a fiduciary duty, for marketing their service “without compensation and failed to render consideration” and allegedly conducting business in bad faith.

Roo Johnson, a representative of the website, said the company was still assessing Mr. Cox’s complaint.

Even before Realty Vision applied for incorporation, the Canadian Investors Protection Fund, a regulatory body, warned “frivolous complaints” like Mr. Cox’s could possibly sink a company’s reputation.

In an e-mail statement, Ms. Johnson said the company carefully vetted potential investors. “Only investors who would not appear to be interested or using this product to speculate” were screened, she said.

In his complaint, Mr. Cox asked that the “financial arrangement” between Realty Vision and the buyer be disclosed so “investors can determine whether the product is a viable investment.”

The complaint said Mr. Cox “specifically requested” that a copy of the online promotional materials be made available to him and he was assured that the site would make the disclosures available “in a timely manner.”

On February 24, Mr. Cox was dispatched to Hamilton to see a house listed with Realty Vision. When he and two other potential investors signed a loan document and went through inspections, Mr. Cox noticed an item at the bottom of a statement that said the house was shown in Toronto.

He used a screen saver application that displayed his laptop on the property in Hamilton. “I literally opened up the screen saver, and it said Hamilton which does not exist in the city of Hamilton,” he said.

He then contacted Realty Vision. “They never replied to me,” he said.

After further investigation, Mr. Cox discovered that an online advertisement called Buy Rewards had listed the Hamilton house, his Toronto home and homes in St. John’s and Scarborough in Toronto. Mr. Cox and his business partner tracked down the agents and contacted them directly.

Mr. Cox said they got the agents, Tamara Sheller and Douglas Cathcart, who are also both partners at Realty Vision, to agree to a refund of the $6,000 Mr. Cox paid Realty Vision for the Hamilton property.

Ms. Johnson said she “is aware of the complaint” but would not comment.

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