Article Courtesy of The Naples News

By VICTORIA MACCHI

Published July 18, 2008 

A federal judge has issued the first ruling in a slew of lawsuits filed against The Residences at Coconut Point in favor of buyers seeking to get out of contracts.

The ruling, made last week in Fort Myers, could be the first step for more than 60 Coconut Point condo purchasers to get their deposits back.

In a 13-page opinion, U.S. District Court Judge John Steele ruled in the case of Pamela Van Hook v. The Residences at Coconut Point LLC, that the property was not exempt from the Interstate Land Sales Full Disclosure Act (ILSA).

Under the federal law, land developers must register subdivisions of 100 or more lots with the U.S. Department of Housing and Urban Development, or HUD, and provide a property report to the buyer with information about the subdivision before signing the contract.

Registering with HUD can require more time and legal counsel at the front-end of a project, but developers can be exempt if they guarantee the project will be completed within two years.

Among other counts, Van Hook alleges The Residences failed to guarantee in the contract signed Dec. 18, 2005, that the condo would be built within two years — invalidating the ILSA exemption.

The judge’s opinion concurred with the claim.

A certificate of occupancy was issued for Van Hook’s Coconut Point condo on Sept. 28, 2007, within the two-year limit; however, the cloudiness of the contract is what the judge called into question — and ruled on — in the opinion.

“(The contract) provides little more than a prediction of completion without consequences to the seller for failure to fulfill the prediction,” the judge wrote.

“It doesn’t matter if the developer builds it within two years; whether or not it’s legal is if they make the commitment to build,” Richard Inglis, Van Hook’s attorney, told the Daily News on Thursday.

Further fallout may come from The Residences not providing property reports to buyers, including Van Hook, as required by ILSA.

According to HUD documents, failure to receive a property report is grounds for canceling a contract and receiving a refund within two years of the purchase.

The judge has yet to rule on three other counts in the Van Hook suit to recuperate a $110,337 deposit on the condo.

A conference involving nine buyers and the defendant is scheduled for next Thursday in Fort Myers to expedite the cases since they “all present identical or similar claims,” the judge said in a statement.

Attorney Michael R. Whitt of Fort Myers law firm Becker & Poliakoff, who represents The Residences at Coconut Point, sees the plaintiffs’ claims as a loophole to escape investments after market conditions changed.

“(The buyers are) hiding behind ILSA to get out of their contracts. ... The fact of the matter is, the project was done, the units were created within two years, delivered and ready to close. Buyers got everything they bargained for,” Whitt said.

He added that his client “disagrees strongly with the ruling” and plans to appeal the decision in due course.

More than 60 people who signed contracts with the Indianapolis-based developer for one of 290 residential condominiums at Coconut Point have filed state and federal claims against the developer, Whitt confirmed.