The Market

Breaking news: Ambivalent condo buyers suffer serious legal blow

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By Teri Karush Rogers  |
January 29, 2010 - 3:36PM

In a legal blow to New York condo purchasers suffering second thoughts, a U.S. District Court judge has rejected the claims of two buyers trying to wriggle out of their contracts at the luxury Harlem development Fifth on the Park.   

According to the decision, filed this morning (and attached as a PDF below), one pair of buyers sought to cancel their 2007 contract on a $999,999 unit and retrieve their $49,999 deposit. Another pair of buyers wanted to break their contract for a $1.4 million unit and get back their $143,000 deposit.  

Both claimed that because the initial offering plan was for more than 100 condos,  the Interstate Land Sales Full Disclosure Act (ILSA) required the developer to file a property report prior to contracting signing--and that by failing to do so, the buyers had two years to rescind their contracts.

To the dismay of the plaintiffs, the court found that the developer had to have actually sold at least 100 units for the property-report filing requirement to take effect.

According to the developer’s lawyer, only around 90 or so units had been sold.

“In New York, this is a case of first impression,” says Daniel Ross,the Stroock & Stroock & Lavan lawyer who represented the developer.  

Ross noted that similar cases in Florida had been decided the other way.

Here, he says, “the judge read the same statute and  the guidelines issued by HUD and ruled that the statute didn’t say what the plaintiffs wanted it to say.”

Four other buyers in the same development have filed similar cases, which have been stayed pending today’s decision.

Ross did not know if the plaintiffs plan to appeal.

Related links:

Second-thought buyers pin their hopes on ILSA (Curbed)

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Teri Karush Rogers

Founder & Publisher

Founder and publisher Teri Karush Rogers launched Brick Underground in 2009. As a freelance journalist, she had previously covered New York City real estate for The New York Times. Teri has been featured as an expert on New York City residential real estate by The New York Times, New York Daily News, amNew York, NBC Nightly News, The Real Deal, Business Insider, the Huffington Post, and NY1 News, among others. Teri earned a BA in journalism and a law degree from New York University.

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