The Toronto Community Housing Corp. has halted the sale of one of its most valuable homes — a Beach duplex listed for $1.375 million — after failing to disclose to three interested bidders that the property is actually zoned for parkland.

The MLS listing touted the dilapidated Balsam Ave. bungalow, which sits on a 50-by-140-foot lot backing onto the Glen Stewart Ravine, as an “excellent lot to build a big house.”

The listing drew dozens of folks to two weekend open houses and, by the time bidding had closed on Wednesday, there were three sealed offers to be considered by the TCHC over the next five days.

A fourth interested buyer — a young couple looking to raze the 1907 cottage and build a new home — backed away after their realtor, veteran Beach agent Jillinda Greene, called the city Feb. 6 to find out exactly how big a house could be erected on the site.

The next day Greene talked to a city planner who said she’d alerted the TCHC on Feb. 3 that the house sits on parkland, throwing it into a highly unusual grey zone.

The prime Beach property is far less valuable if nothing can be built on it. Attempts to have it rezoned would be difficult: to sell off parkland violates city policies and even to get permits to renovate or expand the single-storey cottage would be tricky.

The planner declined to comment.

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Given all that uncertainty, and the high listing price, Greene and her clients were shocked to see open houses go ahead and bids being accepted anyway.

“I just kept thinking: I hope these (potential buyers) have done their due diligence, or their agents have done it for them, and they understand this is not a ‘build your dream home.’ This is a potentially huge headache,” says Greene.

“Somebody could pay $1.4 million and end up with a nice place to have a picnic.”

When the local Ward 32 councillor, Mary-Margaret McMahon, became aware of the situation this week, a day before the bid deadline, she says she emailed TCHC chief executive Gene Jones directly to urge him to “put the brakes on this.”

But it wasn’t until 4 p.m. Thursday, after queries from the Star and after the bid deadline, that the MLS listing was rewritten to remove any reference to building potential on the site.

By 6.30 p.m. the listing had been “suspended” and the TCHC sent an email to the Star: “We are cancelling the listing at this time pending further consultation and review with the city.”

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TCHC communications staff said they were unable to comment further Friday.

The failed deal has raised bigger questions about the way the TCHC is selling off 123 stand-alone homes, which used to house low-income families but, in many cases, have been sitting empty for years.

The TCHC is now looking for realtors to handle 42 of those sales.

“The TCHC needs to do their homework,” says McMahon, noting the Balsam Ave. sale could have resulted in costly legal liability for the city — a new owner could possibly sue if the zoning issue wasn’t disclosed before a deal was finalized — and violates city policies aimed at protecting parkland.

Listing agent Peter Wong of Trustwell Realty Inc. had no idea about the zoning controversy until alerted Thursday by the Star. He was insistent that a new home can be built on the site, just as two new infill homes have been built in recent years just to the north of the well-worn path into the ravine which abuts the TCHC-owned Balsam cottage property.

Wong, a realtor since 1974, acknowledged he usually does title and other legal searches on properties he lists on MLS. He said he didn’t in this case because he was armed with a six-page independent appraisal of the property commissioned by the TCHC.

The appraisal said the dilapidated duplex, which land registry records show has been owned by the city since at least 1947, was to be sold in “as is” condition and is worth about $1.375 million.

There was no mention on any zoning issues on the site, says Wong, who assumed, because the property came with a house, a new one could be built in its place.

City planners are still trying to sort out details and it’s unclear how long the land has been considered part of the publicly owned ravine.

Wong says the lot appears to have been 550 feet deep at one point, which would have taken it well into the ravine, but the front 140 feet may have been severed — a fact disputed by McMahon, who says planning maps show the house sitting “in a patch of green.”

“That’s why we asked the TCHC to put the brakes on this and deal with it properly. They need to go back and look at their whole inventory and find out if there are zoning issues on other properties as well.”