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Bill Radke: Remember when it seemed like property values went nowhere but up? A lot of people bought condos right before the crash and now are trying to get out of those contracts. But a court decision could make that more difficult. Here’s reporter Niala Boodhoo in Miami.
Niala Boodhoo For the past year in downtown Miami, Paul Joyce has dressed in a dark suit and stood across the street from a condo development called the Icon Brickell. Every day, Joyce holds up a cardboard sign asking the building’s owners to call him.
Paul Joyce: The reason I have been out here is I took a preconstruction contract and in the fast rollout, certain things were represented that didn’t go down.
He still wants to live in the building. But others in South Florida put down deposits for condos before they built never intending to live there. They were speculating. Now the units are worth half of what they were during the boom. So many are turning to the courts to get back their deposits.
Andrea Heuson: You can argue that the money that they put down was not unlike the ante in a poker game or the money that you have to put down to play blackjack.
Andrea Heuson is a University of Miami finance professor. She says these depositors were like gamblers simply because they weren’t seeing these condos as long-term investments, but as properties they could flip. Now that construction is done, the contracts are coming due, even for people who never intended to live in the units. So they’re suing.
Allen Levine is a Fort Lauderdale lawyer who represents developers. He’s won a case in federal court that will hamper many buyers’ lawsuits. It involves a law passed by Congress in the 1960s. It was designed to prevent people from selling swampland to unsuspecting buyers and requires certain disclosures. Condo purchasers are now using that law to argue developers didn’t follow through on promises and don’t deserve to be paid.
Allen Levine: It has served as a trap for potentially unwary developers. It gives buyers in a down market an excuse to try to get out of their contracts.
Other lawyers say these days, it comes down to the luck of the draw and whether individual judges are sympathetic to either condo buyers or the developers.
In Miami, I’m Niala Boodhoo for Marketplace.
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