Court-ordered sale leaves tenants hanging
Former landlord has a `history of litigation'
Shortly after seeing an ad on Craigslist, entrepreneur Brian Johns signed a five-year lease on a space in an industrial building on Bridgeport Road in Richmond to accommodate Mocolate, his growing vegan snack business.
Two weeks later, Johns tried to move in and was told by a new property manager that the building had been sold on Sept. 23 in a court-ordered sale. He wasn't allowed to enter the building, nor did he get a refund for the $4,100 he paid for his first month's rent and damage deposit.
Flabbergasted, Johns launched a notice of claim in small claims court last week for $25,000. He is seeking compensation for denied access to the rental space, lost revenue and expenses.
“We are suing the new property manager/company because they are taking over now,” said Johns.
Legally, it would be a “dead end” to take it up with the former owner, who signed the lease, and, in fact, he now realizes there is much more at play.
He and other small business and startup owner tenants in the building, such as Jason Clegg, are in a similar situation, with leases and receipts for rent and damage deposits now unrecognized by the new landlord.
Clegg said he signed a five-year lease with Braut in July for his medical marijuana business, paying him first and last month's rent, plus a damage deposit for a total of about $6,000.
They may have unwittingly become snarled into the saga of an infamous property and its landlord.
It's one that's been dormant for a while, but has notoriety dating back many decades and once made front-page headlines for its description of acrimonious tenant disputes.
In 2000, Vancouver Sun reporters Ken Macqueen and Rick Ouston wrote that then 53-yearold property landlord John Braut has “an extraordinary history of litigation and dispute stretching back over 25 years and some 70 civil cases.”
In several stories, they chronicled the trials of small business tenants fighting against Braut over all kinds of scenarios, from asset seizure to questionable charges, at the same property, 12371-12391 Bridgeport Rd., which has 28 units.
“They are then forced to sue Braut — a master of legal delay — in a process that takes years and thousands of dollars,” wrote MacQueen.
Johns, the vegan snack entrepreneur, didn't know any of this when he met with Braut. He has a photo of him taken on Sept. 11, leaning on the top of a toilet tank to write out a rent receipt for $4,100.
The new owner of the building, according to land title documents, is Bayshore Canada Ventures ULC, which bought the property for $10.3 million in a court-ordered sale that closed on Sept. 23.
The court-ordered case was launched in October 2018 by mortgage lender and Vancouver businessman Michael Averbach after the terms of his companies' loan to Braut, made in 1996, had expired with about $4.3 million, plus accrued interest, still outstanding.
After a remediation period, the court ordered a sale of the property in February 2020, according to case documents.
Commercial brokers put the property onto the market just before the COVID-19 pandemic shutdown started, listing it as having over 31,000 square feet on just under an acre of land.
More than $7 million in proceeds from the sale of the property went immediately to paying outstanding property tax, rental arrears, and mortgage payments owed to Averbach and a second mortgage holder, and also income taxes in excess of $1 million owed to Canada Revenue Agency, according to documents filed with the land title office.
Up until the property sold on Sept. 23, Braut would have been legally able to sign leases for new tenants, according to Hal Oreck, who is Averbach's lawyer.
“Whether it's in good faith is not a question for me, but a question for him,” said Oreck.
Realtors listing the property heard that Braut had been trying to get tenants to sign leases.
It's possible he may have been doing so as a way of showing a potential new lender examples of verifiable income even though the exercise would have been a very long shot.
“We put up signs saying `court ordered sale' on the property and had them bolted to the building so you would need a lift truck to remove them,” said Joel Barnett, a broker at CBRE, describing how these were repeatedly removed and had to be replaced at least four times.
Oreck said that legally, the sale does make the new owner subject to valid leases.
Yousuf Chaudhary of Bayshore Canada, the new owner, said the court process didn't provide keys, lease agreements, deposits or any information.
He said that more than 90 per cent of the tenants don't have leases.
“We have asked current tenants to provide copies of their executed leases, and proof of deposit paid if they had it, but as we have found out, most of the tenants are monthto-month, so there are not many, if any, solid contracts in place and most tenants are frankly welcoming of the fact to get leases in place that give them security.”
Bayshore is willing to sign new leases with some of the tenants, said Chaudhary. They are looking forward to a fresh start.
Attempts to reach Braut at a cellphone number provided by tenants of the building and others were unsuccessful.