Breaking news: Ambivalent condo buyers suffer serious legal blow
Friday, January 29, 2010
In a legal blow to New York condo purchasers suffering second thoughts, a U.S. District Court judge has rejected the claims of two buyers trying to wriggle out of their contracts at the luxury Harlem development Fifth on the Park.
According to the decision, filed this morning (and attached as a PDF below), one pair of buyers sought to cancel their 2007 contract on a $999,999 unit and retrieve their $49,999 deposit. Another pair of buyers wanted to break their contract for a $1.4 million unit and get back their $143,000 deposit.
Both claimed that because the initial offering plan was for more than 100 condos, the Interstate Land Sales Full Disclosure Act (ILSA) required the developer to file a property report prior to contracting signing--and that by failing to do so, the buyers had two years to rescind their contracts.
To the dismay of the plaintiffs, the court found that the developer had to have actually sold at least 100 units for the property-report filing requirement to take effect.
According to the developer’s lawyer, only around 90 or so units had been sold.
“In New York, this is a case of first impression,” says Daniel Ross,the Stroock & Stroock & Lavan lawyer who represented the developer.
Ross noted that similar cases in Florida had been decided the other way.
Here, he says, “the judge read the same statute and the guidelines issued by HUD and ruled that the statute didn’t say what the plaintiffs wanted it to say.”
Four other buyers in the same development have filed similar cases, which have been stayed pending today’s decision.
Ross did not know if the plaintiffs plan to appeal.
Related links:
Second-thought buyers pin their hopes on ILSA (Curbed)
| Attachment | Size |
|---|---|
| Fifth on the Park decision.pdf | 131.57 KB |
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Where is the attached PDF of the decision?
It seems strange to me that the developer has complied with ILSA if he has not provided the property report and other requirements. This is a buyer protection statute and the fact that the units have not been sold seems to defeat the purpose. You would think the early buyers would be most at risk and need the protection of the property report at time of signing.
I would be surprised if this is not appealed and reversed.
There are lots or things to consider when doing such business deal. Most homebuyers fall into such trap because of unawareness. Considering pros and cons could be one way to protect you from any fraudulent activity. Anyway, speaking of condo, condominiums, just like traditional homes, offer advantages and disadvantages. It’s great for people that like apartment style living, but no so great if you have multiple pets and children – but if you want to own your home and not deal with the yard, a condo might do the trick. For one, the mortgage on a condo might be half as much as a regular house, and the taxes as well, but that being said, it's still like living in an apartment. There are also Home Owners Association rules to contend with – and many of us would get payday loans at least to never deal with that kind of nightmare.