This article entitled “Some buyers sue to get out of condo deals” appeared in the Tennessean on March the 18th, 2009. The author is Naomi Snyder:
Now that many condo developers are finishing up work on their buildings downtown, buyers are seeking relief from the courts to get out of buying them.
Several Nashville-area residents filed a lawsuit Thursday in Davidson County Chancery Court against the developers of the 22-story Icon in the Gulch, saying the developers violated the terms of their purchase contracts and federal law.
The plaintiffs, Franke Elliott, David Haley, Scott Williams, Terry Miller and Deborah Williams, are seeking to cancel their contracts and get their earnest money returned, plus punitive damages and attorneys’ fees.
The developers of the Icon’s next-door neighbor, Terrazzo on 12th Avenue and Division Street, got slapped with a lawsuit earlier this month in U.S. District Court from another potential buyer seeking to get out of his contract, also saying the developers violated federal law.
Last month, several buyers in the Braxton Condominiums project at Harpeth Shoals Marina in Cheatham County sued to cancel their contracts, saying the developer failed to live up to promises made.
Buyers in all three projects say the developers failed to finish the developments on time and they shouldn’t have to close.
Attorneys expect more lawsuits to follow as developers press down on buyers who signed contracts but haven’t closed.
In some cases, buyers are having trouble getting financing as the values of their properties have fallen below what they agreed to pay, said Jean Dyer Harrison, the attorney representing the Icon buyers.
“Anyone buying a condo unit, if you are going to get a mortgage, the comparable sales are not there,” she said. “The values of those units are down.”
Disclosures are issue
In some cases, the condo contracts didn’t allow buyers to get out of their contracts if they couldn’t find financing.
But that’s not a point addressed in the condo lawsuits filed this month. Instead, lawyers are arguing that the developers of the Icon and the Terrazzo violated the terms of the Interstate Land Sales Full Disclosure Act, which requires multiple disclosures to buyers in some types of sales.
Health-care executive Franke Elliott, who is suing the Icon, said he attended a frenzied pre-sales event in April 2006 at which buyers were encouraged to claim condos and sign contracts the same day, to avoid missing out on a favorite unit. He said he signed a contract that day for a one-bedroom condo in the Icon, agreeing to pay $205,850.
“There was not a lot of time to deliberate,” he said. “There was no guarantee they would hold a condo for you.”
He put down $5,000 in earnest money with a cashier’s check.
Elliott said the developer then collected his contract but took six months to countersign it.
“Why it took them six months to countersign my contract is somewhat of a mystery to me,” he said.
Now, his attorney is arguing in the lawsuit that the developers failed to complete the unit within two years of his signing the contract, in violation of the terms of the contract and the Interstate Land Sale Act, which requires developers to publish certain disclosures if they don’t finish within two years.
“The Icon has denied that the units were not ready and instead claimed that the date of the contract was not from the date of the acceptance of the funds, but from the much later return of the contract by Icon,” the lawsuit says.
CEO: Obligations met
Charles Carlisle, chief executive officer of Franklin-based Bristol Development Group, developer of the Icon, issued a statement saying the lawsuit is a “direct response to our efforts to compel these individuals to meet their obligations and close on the condominiums they contracted with us to build for them.”
He said Bristol fulfilled its obligations under the contracts.
“We have been proactive in trying to work with every buyer to resolve any particular issues they have and will continue to work to obtain a mutually satisfactory result for all parties involved,” he said.
He declined to address the specifics of the lawsuit. About 125 buyers have closed on purchases in the 417-unit Icon.
The next-door Terrazzo is finishing work on the first six floors and should begin closing contracts at the end of this month, said Anita Bailey, a spokeswoman for the developer, Crosland LLC of Charlotte, N.C.
Crosland declined to comment on the lawsuit against it.
View all condos for sale in the Icon in the Gulch