Real estate stories in Vancouver are getting so outrageous that people are inured to the astronomical numbers.

So it took a while for details in a South China Morning Post story last week to sink in. It published an account of deals in the West End that raise so many questions the government had few answers a week later.

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It was about two nondescript apartment buildings on Nelson Street that Vancouver firm Wall Financial purchased for $17 million three years ago for redevelopment. But it got an offer last fall that was staggering even by Vancouver standards. The property was assessed at $15.6 million, but a consortium of investors offered Wall $60 million, too much to refuse. Then two months after closing the deal, it flipped the lots for $68 million.

That’s two good-sized Vancouver lots sold for $68 million.

The newspaper reported that the deal was orchestrated by a local firm, Sun Commercial Real Estate — Suncom, a firm that pools wealthy Chinese or Chinese-Canadian investors. The account included vivid details of how the company put the opportunity on the market — via Facebook — and sold out in two hours.

It raises questions about whether the limits on how much money can be raised by way of crowd-sourcing ($500,000 a year) were breached, and how often the regulated securities market is being bypassed in that fashion. Suncom has reportedly raised $200 million in the past few years for such deals. A former Realtor who surrendered her licence rather than face a disciplinary hearing played a key role in the Nelson Street deals. And since the deal technically involved shares in a company, rather than real estate, no property-purchase tax was paid.

The sales don’t even show up on the land titles. The property is still registered to the firm the Walls set up. It’s the ownership of the firm that has changed. Registering sales of the land would involve $1.78 million in property-purchase tax revenue, the newspaper calculated. The practice is legal, and the only response from B.C. officials was a B.C. Securities Commission statement that the company that conducted the deals is under “review.”

The tale landed in the legislature Tuesday, but the Opposition didn’t make much headway in getting any further information.

“How can a company raise $200 million for real-estate deals on Facebook without the securities commission stepping in and shutting it down?” NDP Leader John Horgan asked.

Finance Minister Mike de Jong took questions on notice, meaning he needed time to respond.

Outside the house later, he told reporters he couldn’t say much because of the commission’s review. But he noted that selling shares is routine, and the property transfer tax does not apply to that kind of transaction. “It never has, it was never intended to.”

Suncom has done other similar deals and is not the only firm in the field. But de Jong said he was not aware of any estimates about how widespread the practice is.

Horgan said no one knows who the investors are, which circumvents anti-money-laundering controls. And such deals just increase the affordability problem.

“It’s absolutely blind greed that is freezing people out of the market.”

NDP MLA David Eby said every rule, regulation and licence that should be in place apparently failed.

“The question is quite straightforward: Who is minding the shop here?”

The story heightens every suspicion about the exorbitant impact Chinese investors are having on the metro Vancouver market. And it increases the awkwardness of the B.C. Liberals’ position. The government is being goaded to do something about the land rush that has put single-family home ownership out of reach. But it is loath to erode the equity of current owners, or send the wrong signal to international investors.

It has made two moves so far. One was the announcement in February that it was restoring disclosure rules for foreign property buyers that had been abandoned years ago. But it stressed non-residents will still be welcome and encouraged to invest. The disclosure rules take effect this summer.

The other was to ban shadow-flipping, where deals are assigned to others and re-sold prior to closure at a higher price.

lleyne@timescolonist.com