WCI may have a problem enforcing sales contracts.
WCI has been counting on either closing the condiminiums sold 1 to 2 years ago during the height of the real estate bubble, or being able to keep the substantial deposites taken (up to $100k or more) which would allow them to re-sell the units a much lower prices. If they have to return deposits, they could have a serious problem.
CONDO-HOTEL DEVELOPERS BRACE FOR LAWSUIT FRENZY
With condominium sales dropping, the real estate industry is bracing for condo-hotel buyers to run for an obscure escape hatch. Known as rescission lawsuits, they allow buyers to receive full refunds for their units -- provided they can prove developers sold the real estate as an investment, rather than as a vacation home.
''We're all talking to our litigation team these days because we know that's coming down the road,'' Andrew Robins, a partner in the Proskauer Rose law firm in Boca Raton specializing in condo-hotel developments, said at a recent industry conference in Coral Gables.
Selling condominiums as investments violate federal security laws, which bar developers from promising financial returns from a piece of property. That gets complicated with condo-hotels, where unit owners rent out their rooms to guests for a share of the profits.
Robins and his fellow panelists offered advice to condo-hotel developers on avoiding rescission suits. The warnings demonstrated just how fine a line developers walk in selling their projects: Never offer potential buyers information about the local hotel market, unless they request it. Tape sales meetings in which you warn against considering condo-hotels an investment. Divulge no details about the rental program -- which, legally, is optional for buyers -- until a buyer has signed a purchase contract.
miami.com |
