Wednesday, March 26, 2008

The multiple lawsuits filed by buyers unwilling to complete their pre-construction contracts with developers is a notorious aspect of the ongoing real estate state-wide problems.

This article was in today's Miami Herald:

The Related Group ordered to make condo refunds

The New York attorney general directed The Related Group to cancel
contracts and return deposits to some buyers solicited in the Empire

Posted on Wed, Mar. 26, 2008

New York's attorney general's office has asked Miami developer The
Related Group to cancel contracts and return money to New Yorkers who
bought condo units in two of its South Florida projects.

The Related Group broke New York state law by failing to register
units at Miami's 50 Biscayne and Bal Harbour's Harbour House before
marketing them to buyers in New York, the attorney general's office

Related appears prepared to fight the finding, however.

''We categorically expect [the attorney general] to conclude that we
have not violated New York state'' law, said Betsy L. McCoy, Related's
general counsel, in an e-mailed statement. The company is
investigating the issue, and providing documents as required, the
statement said.

The letter from the New York attorney general's office didn't spell
out what would happen if Related doesn't fulfill its request.

It's unlikely the New York decision will have any impact on residents
of Florida or other states who bought condos in South Florida and who
are now trying to get out of those deals.

There could, however, be fallout for other developers in South Florida
who pitched their projects to prospective purchasers in New York but
failed to register through offering statements with the state.

''This decision could potentially impact New York purchasers of South
Florida condominiums well beyond these two projects,'' said Eric
Neuman, a Boca Raton lawyer who represents preconstruction condo
purchasers in lawsuits against developers.

Miami lawyer Robert Cooper, who represents about three dozen buyers in
New York and New Jersey who have sued Related over contracts at 50
Biscayne and Harbour House, expects the attorney general's decision
will further worsen problems in the Miami condo market.

''It means more units on the market and will add downward price
pressure in an already bad market,'' Cooper said. People ``looking to
sell are going to get hurt worse.''

Related didn't disclose how many units in the two projects were sold
to New Yorkers, but Cooper estimated it's between 5 percent and 10
percent. He said his clients put down deposits ranging from $100,000
to $250,000 at Harbour House and $60,000 to $100,000 at 50 Biscayne.

Cooper said his clients were elated with response of the attorney
general's office.

''They fully expect The Related Group will comply with the New York
attorney general's request that they receive their deposits back,'' he

Condominiums -- regardless of where they are located -- that are
marketed in New York are considered real estate securities that must
be registered with the attorney general's office.

The purpose of the law is to ensure developers provide all disclosures
so prospective purchasers can make an informed decision, said Richard
Epstein, a Fort Lauderdale lawyer who represents condo developers.

In two letters dated March 19, Lewis Polishook, chief enforcement
officer for New York's real estate finance bureau, part of the
attorney general's office, informed Related the state has received
numerous complaints from buyers in 50 Biscayne and Harbour House.

''Making a public offering without submitting an offering plan and
having that plan accepted for filing is unlawful,'' Polishook wrote to
Related. ``Please allow the [buyers] to rescind and return all monies
they have paid to you.''

Polishook didn't return calls and a spokesman for New York Attorney
General Andrew Cuomo declined to comment.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc.
Visit my website:
where you can search for Aventura Condos, Florida Condos, Sunny Isles Condos.

Post a Comment