The Hamilton Spectator

Dream home becomes ‘nothing short of a nightmare’

Builder defaulted on payments to mortgage holder


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 when they got a call that would roil their lives and cost them hundreds of thousands of dollars.

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.

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 21lot slice of serenity in a small community 20 kilometres southwest of Brantford.

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.

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.

Following an investigat­ion, the HCRA suspended Bettiol’s licence 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 licence 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.

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.

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

In a situation like this, the buyers could walk away, and recoup 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 newbuild 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.

“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 told The Spectator 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.

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 favour 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.

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 licence 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, MarshallZe­hr, 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.

Bettiol told The Spectator he has “secured new financing to pay out MarshallZe­hr,” 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.

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

Friendly conversati­on with the neighbours 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.

 ?? CATHIE COWARD THE HAMILTON SPECTATOR ?? The Hunter Estates subdivisio­n in Scotland, Ont., a small community 20 kilometres southwest of Brantford.
CATHIE COWARD THE HAMILTON SPECTATOR The Hunter Estates subdivisio­n in Scotland, Ont., a small community 20 kilometres southwest of Brantford.

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