Article Courtesy of The Sun
Sentinel
By Jennifer Gollan
Published October 24, 2007
PLANTATION - When
Jennifer Wigand put down a deposit in 2005 for a condominium in a
multi-use development called Veranda at Plantation, she hoped to quickly
sell it and use the profits to help pay her law school loans.
Then the housing market plunged. Wigand said she wasn't worried because
the developer had promised she could back out any time and her money would
be returned. But in July, when she asked to take part in that program,
Wigand said she was told it had been canceled.
Like an increasing number of buyers in South Florida, Wigand last month
filed a lawsuit to get out of the deal. Last week, 20 other buyers in
Veranda joined her suit.
I was disappointed that the developers and their agents went back on their
word," said the 24-year-old Fort Lauderdale resident. "I just
want my [$39,200] deposit back."
Ken Simigran, president of builder WestCity Partners, Inc., declined to
comment on the buyback program, but insisted, "Our contract is very
clear. We have delivered on everything we were supposed to perform
on."
Brad Hunter, director of the South Florida region for Metrostudy, a
housing market research firm, said more lawsuits are being filed because
"there is a lot of buyer's remorse out there. Naturally people will
be looking for ways to get out."
About 40 percent to 60 percent of buyers are trying to wiggle out of their
contracts, said Gary Poliakoff, a Fort Lauderdale attorney, referring to a
dozen projects in South Florida that his firm represents, including
Veranda.
"The claims and the suits are namely a means for an end for
investor-buyers to get out of deals where they weren't able to realize the
profits they expected, but it doesn't mean the reasons are
legitimate," Poliakoff said.
Developers are not budging, Poliakoff said, because they "built the
buildings on the reliance that the buyers are ready, willing and able to
close."
John Mike, chairman of the Realtors Association of the Palm Beaches, said
those most upset are buyers who had no intention of living in their
properties.
"A lot of those condos, unfortunately, were bought by speculators
with the same business plans — to flip their properties, and
unfortunately that has created a glut of units. Now were are seeing a
large number or people trying to get their money back by hiring
lawyers."
Veranda, a $100 million development on 12 acres at Pine Island Road and
American Expressway, is a cornerstone in the rejuvenation of Plantation's
midtown. It was to be built in two phases.
Phase One includes a 45,000-square-foot shopping center anchored by a
Publix, and 200 newly completed condos. Plans for Phase Two — about 175
condos — are on hold because of "market conditions," said
Simigran.
Ori Onn, a real estate agent, signed a contract in 2005 to buy a
one-bedroom Phase One condo for $295,000. He put down $59,000 and like
Wigand, he planned to flip it.
"They told me they would put it on a resale program if I didn't go
through with the deal," Onn said, adding he tried but was unable to
reach Veranda representatives four times in the last few months to take
them up on the offer.
"I just want my money back," said Onn, of Aventura, who is part
of Wigand's lawsuit.
The suit, filed in Broward Circuit Court against Fort Lauderdale-based
WestCity, and two other defendants, seeks redress for what it describes as
fraud in the inducement, negligent misrepresentation and breach of
contract, among other issues. It asks that the contracts be rescinded and
security deposits refunded.
The Veranda buyers also filed a complaint in federal court seeking an
injunction to prevent the condos from closing. It alleges WestCity failed
to comply with a federal law requiring developers to register their
developments with the U.S. Department of Housing and Urban Development,
among other issues.
Wigand's two-bedroom, $392,000 condo is scheduled to close on Oct. 30. She
said she will forfeit her deposit if the court does not grant her relief.
Onn said he doesn't know when his condo is scheduled to close, nor has he
decided how to respond when it does.
Given the protracted pace of taking cases to trial, most lawsuits filed in
South Florida since the real estate market downturn are still making their
way through the courts.
Those buyers "won't get their deposits back until a decision is made
by the courts," said Joan Tersigni, president of the South Broward
Board of Realtors.
And "if everyone walks away [from their deposits] and [the builder]
can't resell them, the developer will file for bankruptcy and perhaps
someone else will come along and buy it," she said.
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