Condo Buyers Retreat… to Court

The new Marina Grande condominium seems like the dream residence for the Florida lifestyle: serene water views from the base of the Blue Heron Bridge, luxury interior finishes and even a marina next door.

So why have so many prospective Florida mortgage applicants and condo buyers changed their minds about living there?

During the past year, two dozen lawsuits have been filed by buyers wanting out of contracts for 30 units in the $200 million project.

But Marina Grande is by no means the only Palm Beach County project losing favor with buyers.

The county’s troubled housing market is causing fits, particularly condo builders trying to unload thousands of units onto an overbuilt market.

They now face the nightmare of taking back already sold units.

Growing numbers of home buyers have begun running to the courts exploiting any remedy to get out of pre-construction contracts on houses, townhouses and condos throughout South Florida.

Buyers who signed contracts months or even years ago expecting to flip the properties for fat profits now struggle to make the Florida mortgage loan payments and realize they might not be able to sell into this slump.

In court documents, buyers say they want out because they don’t like the way that developers have changed terms of their deals. Developers counter that buyers are reneging simply because the flippers’ market has died.

“If the market had continued soaring, these people would have closed on their contracts, and this lawsuit never would have been filed,” said Michael MuÒiz, a Boca Raton lawyer.

MuÒiz represents Hovstone Properties Florida, which 16 buyers are suing, trying to get out of contracts at Monteverde, a Boynton Beach condo.

Still, buyers anxious about the floundering Florida real estate market seem more willing to risk a protracted battle in the courts, with no guarantee of success, than a near-term turnaround in the real estate market.

Attorney Gary Nagle said he counsels his clients this way: “We will win, or we will lose. If you want odds, go to Vegas.”

Nagle, of Juno Beach, is leading the challenge at Marina Grande, on behalf of buyers trying to get out of contracts on 22 units. The first of his lawsuits goes to trial Tuesday.

Nagle’s clients are suing to void their Marina Grande contracts by claiming the developer, Marina Grande Associates Ltd., changed terms of their deals.

New documents show maintenance and insurance will cost 30 percent more than first promised. Under Florida law, buyers can void contracts if developers make material changes that buyers consider adverse.

Not so fast, said Fort Lauderdale attorney Maurice Garcia, who represents Marina Grande.

“What’s really changed is the market,” Garcia said. “Not anything else.”

Garcia alleges that buyers are making excuses to get out of deals by complaining about minor changes, such as the number of parking spaces.

Or the exterior color of the building, which was marketed as a soothing beige but ended up being vivid red, yellow and cream stripes.

The building’s exterior color has become a touchy subject, local real estate agents say. Some have dubbed Marina Grande the “rainbow condo” or the “condiment building,” as in ketchup, mustard and mayonnaise.

Others just refer to it as “that monster.”

None of that seems to shake developer Brian Street. He defends the paint job, saying it evokes “a Caribbean feel.”

Paint color aside, there’s little question that this market doesn’t favor resales, despite continued low Florida home loan rates.

Of the project’s 349 units, 14 remain to be sold by the developer, plus 57 for sale on the resale market and 46 more on the rental market, said Barbara Anne Fox of Lubeck Real Estate on Singer Island.

Prices on Marina Grande units started in the $300,000s when the project opened. Now the Florida condos sell for somewhere in the $400,000s, on up to more than $1 million.

Fox, who lives in a Marina Grande unit, wishes investors would stop trying to bail out of their deals. So what if the real estate market isn’t on fire, she says. “This is still a great place.”

Buyers aren’t likely to get a free pass from Street, president of Boca Developers, a company associated with Marina Grande.

Indeed, Street said he’s not responsible for spiraling property insurance costs that have been buffeting the region’s homeowners, so he’s not going to allow buyers to escape their contracts.

“We entered into a compact and I relied on it,” Street said. “If I had failed to meet my obligation, I doubt anyone would have been forgiving.”

Meanwhile, still uncertain is the fate of a dispute at the Monteverde community in Boynton Beach. Delray Beach lawyer Brian Lipshy represents 16 buyers suing Monteverde’s developer, Hovstone Properties.

The buyers want out of the Monteverde condo, part of the Renaissance Commons community on Congress Avenue in Boynton Beach, because they say Hovstone has changed the deal.

The buyers contend that Hovstone’s decision to build only two of four planned buildings makes the project a “phased” condo, in violation of contract terms.

Lipshy said his clients might not have bought into the project if they knew up front that Monteverde - prices at Monteverde range from $250,000 to $360,000 - wasn’t going to be built all at once.

Although court documents show that Hovstone Properties admits Monteverde is being built in stages because of sluggish sales and hurricane fears, MuÒiz said the suit is nothing more than speculators trying to avoid closing on their contracts.

The sides have been duking it out in court for months, and thus far, the matter shows no signs of being settled.

Lipshy said it’s a sign of the times: “I’ve filed more lawsuits in the past six months than in all my years as an attorney,” he said.

SOURCE: Palm Beach Post