Getting dream home ‘nothing short of a nightmare’ for couple

It was to be their dream home. Rosy and Michael McGrowder were packing up to move into their new 2,600-square-foot custom-built house in Brant County when they got a call that would roil their lives and cost them hundreds of millions of dollars.

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On the phone that October 2022 day was a lender for their builder. The McGrowders were told if they wanted to close on the sale of their home the following week, they’d have to pay an additional $300,000 — one-third of their original purchase price.

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The builder, Mike Bettiol of Mariman Homes, had defaulted on payments to his mortgage holders, the lender told them.

To try to recoup costs, his lenders were looking to get a higher price for the McGrowders’ newly completed home in the Hunter Estates subdivision in Scotland, Ont., a 21-lot slice of serenity in a small community in the County of Brant.

It was unfathomable to Rosy and Michael, who had signed a $900,000 purchase agreement with Bettiol in his Hamilton office on May 23, 2020, paying him a deposit of $110,000.

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But after spending thousands of dollars on litigation lawyers, the McGrowders were told if they wanted the home, they had no choice but to negotiate with the lenders, “because they are the ones who now own the house,” Michael told The Spectator.

It was a sickening feeling, Rosy said. “We were just in a very depressed state.”

It turns out, they weren’t alone.

Documents from the Home Construction Regulatory Authority (HCRA) — the regulator of builders and vendors of new homes — obtained by The Spectator show:

• The agency had received 13 complaints against the builder as of May 2023, which a notice issued by the regulator said revealed “a pattern of financial mismanagement resulting in significant hardship for consumers.”
• Mariman Homes defaulted on mortgage obligations that “left several purchasers with the prospect of losing their homes.”
• In addition to Rosy and Michael, three other buyers in the Scotland development were forced to pay more to lenders to close on their homes.
• Two of these buyers were already living in the homes when they found themselves facing the threat of eviction over the builder’s mortgage defaults.
• Twelve of the 21 lots on the project went to a lender to resell through power of sale, although deposits were already taken by Bettiol from homebuyers.

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Following an investigation, the HCRA suspended Bettiol’s license on Dec. 5, 2023, citing in the proposal to suspend that Bettiol entered into agreements of purchase and sale of 108 other homes “without proper authorization.”

Reinstatement of his license is contingent on Bettiol proving to the HCRA that he has complied with his legal obligations and has the capability of fulfilling his obligations to consumers by June 30, 2024, Bettiol told The Spectator.

An anomaly?

The Scotland incident was “an anomaly,” Bettiol said, arguing the lenders ran out of money (one of the lenders rejected that claim outright in a conversation with The Spectator), and they “did not have my consent” to ask for more from the buyers.

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Bettiol said instead of selling the lots to pay off the lenders, he self-financed the last four homes.

He said while what happened was “a pain, it’s brutal, it’s not right,” the homebuyers still got “a fantastic deal.”

“They bought homes that more than doubled in value over the course of their relationship with me — that’s their win,” he said.

But the McGrowders don’t see it that way. “He messed up our life,” said Rosy, with Michael adding that moving into their dream home was “nothing short of a nightmare.”

Rosy was adamant their story is heard “so it doesn’t hurt other people. I want people to know to stay away from this man.”

Protections for buyers

While the McGrowders’ experience may sound unprecedented, would-be homebuyers need to be aware that it can happen, Bob Aaron, a real estate lawyer who was not involved in this transaction, told The Spectator.

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Buyers should not treat a new-build home as their own until the transaction legally closes, he said.

In a situation like this, the buyers could walk away, and recover their deposit — 10 per cent of the purchase price, up to $100,000 for a home over $600,000 — from Tarion, a consumer-protection agency overseeing the warranties on new-build homes , said Aaron.

But, because the McGrowders were building their “dream home,” they spent an additional $120,000 over and above the purchase price for custom upgrades to the flooring, kitchen cabinetry, plumbing and electrical into the home.

This was paid upfront to Mariman Homes and the cabinetry company, Michael said.

Walking away would have meant forfeiting that — not to mention thousands of dollars worth of fixtures and appliances they had already moved into the house — including a hot water heater, spa bidet toilets, exterior door locks and light fixtures, which they were skeptical they’ d get back.

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“So that would have put us out quite a bit,” Rosy said.

Deposit protection may cover “upgrades and extras like hardwood flooring or granite counters,” Andrew Donnachie​​​​, manager of media and stakeholder relations for Tarion, told The Spectator. However, he advised buyers to review their agreement of purchase and sale with a lawyer and reach out to Tarion to review their individual situations.

Aaron said he advises buyers of new-build homes to specify they want a home without appliances, and wait until after they’ve taken possession before having them delivered.

If a buyer wants upgrades or custom finishes, it is typical for those to be paid for in advance, however, so Aaron suggests ensuring the builder has extra deposit insurance to cover them, should a case like the McGrowders’ occur.

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The McGrowders ended up negotiating with the lenders and paying $200,000 over the agreed-upon purchase price, closing the sale on March 2, 2023.

“It was the only way to get our home,” Rosy said.

According to Bettiol, the Scotland homeowners who paid additional sums to the lenders will each receive $100,000 as a part of a fine he says the HCRA imposed on him.

But aside from filing complaints with HCRA, homeowner recourse seems limited in a situation like this.

Suing the builder is a crapshoot — “it may work or may not be worth the paper,” Aaron said, noting that even a judgment in the homeowner’s favor wouldn’t mean much if the builder has no money.

The McGrowders even went so far as to reach out to police.

“They couldn’t do anything,” Rosy said.

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Laying charges would require evidence “that these people defrauded the buyers intentionally” and weren’t just “really bad business people,” Aaron said — and the intent factor is difficult to prove, he said.

An isolated incident?

Bettiol’s HCRA profile shows he received his first builder license in 1989, and in his interview with The Spectator, he claimed he has built somewhere in the area of ​​700 homes since then.

His HCRA profile shows he has enrolled for warranties to build homes in multiple communities in the region, including Ancaster, Oakville, Glanbrook, and Caledonia.

But it seems the Scotland development may not have been an isolated incident.

Other Bettiol developments — in Oakville and Haldimand — are in a receivership process with another lender, Marshall Zehr, and Bettiol has been named as a defendant in at least 13 civil court cases going back to 2017, according to exhibits filed in court as part of the receivership. Responses from Bettiol within the same document suggest many of those cases have been settled or dismissed.

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Bettiol told The Spectator he has “secured new financing to pay out Marshall Zehr,” which he says will take the properties out of receivership.

A history of civil cases against a builder is typically “a bad sign,” Aaron said — but not necessarily something a real estate lawyer would check for when helping with a sale.

He suggested buyers of new builds do their own due diligence by looking at the online builder registry through HCRA to see if there are complaints filed against the builder.

Stalled dreams

Although one of the lenders has listed the 12 remaining Hunter Estates lots for sale off and on, Bettiol said his goal is still to “build these people their homes.”

Today, Hunter Estates is a patchwork of nine beautiful homes, dotted among empty, overgrown lots in the stalled development.

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“It’s like we’re living in an abandoned area,” Rosy told The Spectator.

Friendly conversation with the neighbors typically turns to the builder, to what they’ve all been through, Michael said.

Some of them might not have to wait long to test Bettiol’s claim that the homes have doubled in value.

“We’re going to stick it out for a little bit,” Michael said, but admitted they might sell when the time is right, because their dream home has been tainted by what they went through to get it.

— With files from Matthew Van Dongen

Celeste Percy-Beauregard is a Local Journalism Initiative Reporter based at the Hamilton Spectator. The initiative is funded by the Government of Canada.

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