Condo developer sues potential buyers…..
by Tom on March 14, 2009
in Market Musings
This is in my home town and about a block and a half from my office…..
A couple of thoughts:
- Standard “thinking” in real estate says that if a buyer “walks” from their contract, all they lose is their deposit. However, I believe that the term the developer is using is called “specific performance.” That means that they are saying to the buyers, “We’re taking you to court to force you to buy the condo.”
- The reaction that I’ve heard from “people on the street” can essentially be described as, “Wow, that’s ugly.”
- It says that at one point they had 150 contracts and that they have 52 sold and are suing 24. That’s 76. I wonder what happened to the other 74?
Now here’s a chicken and egg question for you:
Is it harder to finance condos because of problems like this, or are there problems like this because it’s harder to finance condos?
Tom Vanderwell
GRAND RAPIDS — Nearly two dozen would-be River House at Bridgewater Place condominium buyers are being sued by the downtown skyscraper’s developer.
Grand Rapids Press File PhotoRiver House at Bridgewater Place on Bridge Street NW once had nearly 150 units sold in the 34-story building. But dozens of buyers have been unable or unwilling to fulfill their contracts.Developer Robert Grooters has sued 21 would-be River House condominium buyers in an effort to get them to buy the units they signed contracts for as far back as 2006.
At one point, the company said it had sales agreements for nearly 150 of the units.Grooters said his agreement with Fifth Third and Huntington gives him a year to work through issues and continue selling units. There has been no talk about the banks foreclosing on the project.
“They haven’t said they are going to foreclose on the project, but at the same time, there is pressure,” he said.
I really hope the developer prevails. At some point a deal has to be a deal, your word must be your bond, But maybe that’s just quaint dino talk.
The bank has a cause of action as well it seems to me. They lent the money on the basis of the purchase contracts. Could this be the beginning of the end of pre-construction condo sales? Just thinking here. Why would any bank except for too big to fail, bonuses guaranteed by we the taxpayers banks such as B of A or Chase lend money for a condo project based on pre-sale contracts? If its one of these banks, heck, Barney Frank, Pelosi and Obama will just send the lost cash with an extra three zeros on the check just for good stimulus.