VANCOUVER—The 5,800-square-foot, five-bedroom, six-bathroom house in West Vancouver’s Sandy Cove neighbourhood features a roomy three-car garage, an elegant white interior-design scheme and a state-of-the-art “chef’s kitchen.”

For two years, the minimansion with a mock-Tudor roofline has been sitting at the end of its stately driveway empty, unsold and forlorn, and it’s now in foreclosure. BlueShore Financial, the credit union that loaned the homeowner and his stepson the money to redevelop the property, recently won a judgment in B.C. Supreme Court allowing it to sell the home to recoup the loan.

The owners listed the property in August 2016 for $6.5 million, but now the price has dropped to $3.988 million, and still there are no takers. The current assessed value of the property is $3.4 million.

The lawyer for the former owner, Richard Baker, did not respond to requests to speak to his client. Baker’s stepson and partner in the redevelopment project, Richard Chandler, declined to comment, so the story is being told through the April 15 judgment in the foreclosure case by Master Bruce Elwood, an appointed court official who presides over civil cases.

According to the judgment, Chandler and his stepfather, Richard Baker, decided to redevelop the West Vancouver home Baker had owned for nearly 40 years, hoping to increase its value from $2 million to $6.5 million.

Those were heady days for the West Vancouver real-estate market. A historic run-up in prices that would push many houses up into the multimillion dollar range was just starting; prices would later peak in the spring of 2016.

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But the market had turned by the time Chandler, a homebuilder who owns West York Homes, finished the new house in August 2016, after the BC Liberals introduced a 15 per cent foreign-buyer tax in July.

The New Democrats were elected in May 2017 and introduced more taxes designed to rein in real-estate speculation. Those included a tax aimed at vacant properties and homeowners who don’t pay taxes in B.C., an increase in the foreign buyer tax to 20 per cent and an increased property tax on homes worth over $3 million.

According to the judgment, Baker had lived in his West Vancouver home for 39 years and had built up considerable equity when he and Chandler agreed to redevelop it.

The two men got financing from BlueShore that included a construction loan of $1.5 million and another $2.2 million mortgage against the West Vancouver home and Chandler’s house in Burnaby. The debt was in addition to a first mortgage on the Sandy Cove house that still had $155,500 owing.

The two men agreed Baker would get $100,000 up front, and he and his wife would move off the property so the new house could be built. Baker expected to make $2 million on the deal, and argued in a court submission that BlueShore should sell the Burnaby home Chandler lives in with his family before selling the empty West Vancouver home, because that would make it easier to refinance the West Vancouver house.

On April 15, Elwood decided that the bank should sell the West Vancouver home first.

Chandler and Baker are not the only developers to find themselves in trouble as Vancouver’s 2016 real-estate bubble bursts. Michael Geller, an architect and developer who has worked in the industry for 45 years, says this is the worst downturn he’s ever seen.

Geller previously spoke to The Star about his trouble selling the units in a restored heritage home and two cottages in West Vancouver’s Ambleside neighbourhood. The homes have now been on the market for eight months, and Geller has publicly offered realtors a $25,000 bonus to sell the properties.

But Ron Rapp, the CEO of the Homebuilders Association of Vancouver characterized Chandler and Baker’s plan as “a purely speculative venture that did not pan out as foreseen.”

In an email, Rapp said the association’s members are experiencing difficulty coping with the mortgage stress tests and tax penalties, “but are still maintaining a steady but diminished level of activity.”

“Overall we are not aware of any commensurate level of hardship, and this type of speculation is not endorsed or encouraged by this association.”

Despite the downturn in the West Vancouver real-estate market, BlueShore Financial is not seeing an increase in foreclosures, according to CEO Chris Catliff.

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Prior to 2013, BlueShore Financial was known as North Shore Credit Union. It has rebranded itself as a boutique financial institution that specializes in wealth management, with much of its clientele based in West Vancouver and North Vancouver.

“People tend to rent or sell their home if they cannot make payments. Almost all foreclosures happen when the owner dies and stops paying, or an emotional legal dispute such as a construction problem or divorce causes people with a grievance to refuse to pay,” Catliff wrote in an email. “While these are very infrequent, they can take time to resolve through the courts.”

Correction - April 24, 2019: This article was edited from a previous version that misstated the square footage of the West Vancouver home as 16,000.

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