Real Estate Lawsuit - An interesting case
By Henry B. Nathan
The stage: A million-dollar condo in one of the top preconstruction developments in South Florida, a high-rise oceanfront luxury building on a prime Beach location.
The complaint: The buyer signed a contract a few months ago and paid the deposit. At this time, and well before the scheduled completion, he is given notice by the developer of certain modifications to the building. The most significant was about the private elevator to his unit. The developer is now announcing that the private elevator will be shared between two apartments.
Other changes imply reduction of certain amenities areas.
The contract allowed the developer to modify the proposed conditions as long as they did not imply "substantial" changes in the transaction.
At receipt of the developer's notification, the buyer requests to cancel the contract and get his deposit back alleging that the changes will substantially decrease the value of his condominium unit in this ultra luxury building.
The buyer sustains that for privacy and security issues, the value of a private elevator is of important value and it's elimination would mean a significant decrease in the condominium value.
The developer does not agree, stating that the proposed changes are not material or substantial and would therefore be allowed by the contract. They are not refunding the buyer's large deposit.
A lawsuit is in its initial stages, as we understand.
Two years ago, it wouldn't even have been an issue. The buyer would reluctantly agree to the changes since his contract would have meant a couple of hundred thousand dollars profit by just 'flipping' it to one of the dozens of eager investors on a waiting list.
But this is 2006 and things have changed a lot. Developers cannot find that waiting list
anymore and investors are leery of the market's future.
The case is in its initial phase.
It is not a really unusual situation and I wouldn't have pointed it out but because it is illustrative enough of how the market has changed.
At this date I can inform that a settlement was reached when the developer refunded the deposit except the commission paid to the Realtors.
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