Kelowna property owner profits after stiffing developer
A Kelowna landowner was ordered to pay nearly $200,000 in compensation for frustrating a development agreement he intentionally stalled as the market was nearing all-time highs in 2021.
According to a B.C. Supreme Court Justice, Greg Baytalan once held a dim view of property developers. He heard several offers to buy and develop his Valley Road property in Glenmore over the years.
“Although Mr. Baytalan was always interested in selling the property, he was disenchanted with these developers and declined their various proposals,” Justice Gary Weatherill said in a recently published decision.
Instead he contacted Michael Culos, a longtime developer who had a "good reputation" and who was a member of his church and a service club he was involved in. They struck an agreement in 2020 for Culos’ company to obtain an option to purchase the land and develop it, with a promise of “top dollar” for the property — 10 per cent over appraised value at the time of the agreement, or $1.5 million.
The plan was for Culos to take not more than 18 months to decide if he wanted to buy the property. His plan was to build a residential facility for Freedom’s Door and sell it to BC Housing.
“The thought of a supported/subsidized housing development being built on it made (Baytalan) feel good," Weatherill said.
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As they neared the completion date, Culos tried to complete the agreement but Baytalan went cold, refused to answer emails, refused to accept a deposit cheque for the sale.
Weatherill said it was all in an attempt to renegotiate the agreement or wait out the clock on the agreement.
That’s because by the closing date in December 2021, real estate prices in Kelowna went up 35% amid the pandemic. Baytalan got a new appraisal on his property for $3.3 million.
“This is a case of seller’s remorse,” Weatherill wrote. ”When he signed the (offer to purchase), Mr. Baytalan was quite happy with the agreement he negotiated.”
“Meanwhile, (Culos) was busy spending time and money on the rezoning application and development plans on the basis that the purchase price would be $1,505,000… Mr. Baytalan knew that the market had sharply increased… (and) concluded in hindsight he made a bad deal and wanted to renegotiate the purchase price to reflect that increase.”
The ploy still seems to have worked in this favour. Culos sued seeking performance of the contract — he wanted the land, as the bargain stipulated. That turned out to be too high a legal bar to meet and instead, Baytalan was ordered to pay Culos $180,000 to cover 18 months worth of costs trying to bring the project to market.
That leaves Baytalan much the richer for breaking his word.
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