Sunday, October 31, 2010
In New York, a protracted court battle rages between a luxury real estate developer and 41 condo owners seeking the return of their deposits. Many of their sales contracts for units at The Rushmore were executed at the height of the real estate market. Now the buyers want out, and they argue that the contracts entitle them to the return of their deposits if at least one sale did not close by Sept. 1, 2008. The first closing did not occur until February 2009. The developer argues, however, that there was a typo in the contract and the date was intended to be September 1, 2009. In response, the buyers argue that the contract should be enforced as written.
The case has worked its way through the federal court and now is finding its way back to state court. The WSJ reports:
The Second U.S. Circuit Court of Appeals in Manhattan this month affirmed a May district court ruling that said the developers couldn't block the release of the deposits now held in an escrow account.
The developers appealed to federal court—rather than taking the more traditional route to state court—arguing that the attorney general's ruling violated the U.S. Constitution because they were denied due process of law because they weren't permitted to contest and evaluate the charges against them.
Richard N. Cohen, an attorney for a group of the condo buyers, said the buyers "question the developers' motivation in continuing to drag out this case in a different forum, having been unsuccessful in the federal courts and with the attorney general."
Presumably, if the developer has to find new buyers, it will never get close to the prices of these contracts and it will likely turn the development into losing proposition.
[Meredith R. Miller]