Times continue to be tough for developers, with receiverships and foreclosures unfortunately continuing to pile up. The latest project to join the ever-growing list is The Sophia, according to filings in the Supreme Court.
The Sophia is a nine-storey rental building that was planned for 304 and 316 E 1st Avenue in Vancouver, at the intersection with Scotia Street, about one block west from the Great Northern Way–Emily Carr Station that's currently being constructed as part of the Broadway Subway Project.
The property is legally owned by 0793231 BC Ltd. According to the Land Owner Transparency Registry, the interest holders in the numbered company consists of seven individuals, five of whom are citizens of, and primarily reside in, Hong Kong.
Local developer Cape Group was retained as the developer of the project, but court documents indicate that Cape Group and the owners had an agreement that would have seen the developer retain an ownership interest in the project after it completed.
A development application was submitted to the City in May 2020 and was ultimately approved in November 2021, but the project has not progressed to the construction stage.
The site is currently occupied by two warehouses that were originally constructed in 1939 and 1974.
Debt and Disposition
The foreclosure proceedings were initiated against the owners in late-July 2023 by the Gulf and Fraser Fishermen's Credit Union, who claimed that they were owed $11,131,422.54 as of July 27, 2023, with interest accruing at a daily rate of $3,214.73.
The mortgage is first-ranking and was registered in March 2020.
By September, the Supreme Court granted an order nisi, confirming the outstanding debt at $11,314,786.87 as of September 21, with interest continue to accrue. The order also set the redemption date — the date by which the debtors can pay the outstanding amount in order to stop the foreclosure — at March 21.
That day came and passed without the debt being paid, and the Supreme Court subsequently granted an order for conduct of sale to Beem Credit Union — the company that formed after Gulf and Fraser merged with Interior Savings earlier this year — allowing Beem to sell the property to recover the debt.
The property does not appear to have been publicly listed for sale yet.
The Sophia
The Sophia, planned for 304 E 1st Avenue in Vancouver.(MCMP Architects / Cape Group)
BC Assessment values 304 E 1st Avenue at $13,078,200 and 316 E 1st Avenue at $6,320,400, for a total of $19,398,600.
The Sophia project was also the subject of a recent and related lawsuit over a lien claim registered on the land title. The claim was filed by Cape Group, who issued an invoice for services to the owner in an amount just over $2M in June 2022. The owners refused to pay, however, believing that they owed Cape Group nothing. Cape Group then filed a lien on the land title in July 2023, just before Gulf and Fraser initiated the aforementioned foreclosure proceedings.
STOREYS reached out to Cape Group for comment on May 8, but did not receive a response.
Following a hearing in March 2024, the judge presiding over the case noted that the owners tried to sell the property in late-2023 and received one offer for the property, but the sale fell through because the buyer refused to waive the conditions.
One of the [owners'] principals has deposed that he believes that the charges that the [Cape Group] has placed on title have made a sale or refinancing of the property more difficult," noted Justice Milman. "He also reports that the defendants' realtor has heard prospective purchasers of the property express concern about the plaintiff's claim."
Encumbrances on a land title can make selling a property — among other things — more difficult, and landowners typically try to have them removed as quickly as possible. Following the March hearing, the court granted the owners' application to remove the lien, as well as a certificate of pending litigation, likely making the property easier to sell.
The sale of the property would require final approval from the Supreme Court.
