Wednesday, October 20, 2010
They're reading it now.
The New York Times just published online a story about how would-be condo buyers are wiggling out of their contracts courtesy of shoddy paperwork. These buyers put good money down on contracts at the height of the boom. The expected market value of those now-completed units has dropped below the purchase price.
But a contract's a contract, right? Not so fast. Crafty lawyers are combing through the documents and running the due diligence. Sloppy doesn't pay: the lawyers are winning case in court when developers failed to fill in little details like the legal description of a unit.
Of course, the developers are howling. A few rebels can unravel the entire financial structure of the sell-through: if enough buyers renege, the building might fall below the minimum for Fannie and Freddie financing. Not to mention that the developers' profits go down the drain along with the sale.