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I'm a 27 yr old who just last week cancelled my condo purchase.
I live in LA and finally made enough money to make my first home purchase. I made the decision to buy two years ago, at the beginning of the project, before it was even built. I did what 280 other buyers did and placed a holding fee of 5%. Its a legit condo, very nice, but as you all know here we are today in a real estate crash... The selling price did not reduce, making it a bad purchase. Thus so far 20 of the 280 units have closed.
The contract says if I default then they keep my deposit, $18,000.
I heard California deems reasonable, only a 3% penalty. Do I have grounds for going after my deposit part or whole????????? I will be consulting a lawyer, but want advice before I do.
I already am about to lose 18k, I want to make sure more money spent on a lawyer is wise.
I greatly appreciate any help. It took me a while to save and I dont want to start from scratch again. This sucks.
I'm a Realtor in Colorado and I don't know anything about Calfornia. I assume you did not use a Realtor when you signed the contract to purchase. ??
But with $18,000.00 at risk, I would certainly consult with an attorney before walking away from that much money. You can ask an attorney for an estimate to review the contract - but even if it's several $100, I think it might be worth it.
Get an attorney. My friend back in 2005 made a 30K deposit on a condo in the inner harbor of Baltimore. These condos were preselling for 1.2 million.
Well it took the builders almost 2 years to complete the condo. By that time, the real estate market was on the decline and and builders were selling the condos at 1 million instead of 1.2 million my friend had initial signed the contract for.
It took them almost 2 years to build the place, which is quite unacceptable because towards the middle of 2006, they were having a hard time selling the units and slowed everything down.
My friend hired an attorney saving the builders took too long to complete the building. They had initially said it would only take 12 months to build from the time he signed the contract. The builder's attorney countered with the all in one excuse, "force majeure clause" in the contract for the reason the building was delayed.
My attorney said there were no significant weather delays that could cause them to delay the building for more than 24 months.
In the end since the unit was officially completed and my attorney threaten to drag this case into court for 2 plus more years, the builders relented and gave my friend back 50% of his deposit plus my friend had to pay 5K in attorney fees. The builders did not want to be responsible for very high Baltimore city real estate taxes (we are talking about 15K per year).
So my friend got back 10K of his 30K deposit. It's better than nothing. Of course the condo's value has decline even more.
So 18K is a lot of money to lose. Hire an attorney and see what he can do for you.
Your first option is free. What does your contract say? When was your unit supposed to be finished? 2 years seems like a long time from date of sale to date of occupancy. Does your contract allow you to walk away if you cannot find financing or any other reason?
I'm a 27 yr old who just last week cancelled my condo purchase.
I live in LA and finally made enough money to make my first home purchase. I made the decision to buy two years ago, at the beginning of the project, before it was even built. I did what 280 other buyers did and placed a holding fee of 5%. Its a legit condo, very nice, but as you all know here we are today in a real estate crash... The selling price did not reduce, making it a bad purchase. Thus so far 20 of the 280 units have closed.
The contract says if I default then they keep my deposit, $18,000.
I heard California deems reasonable, only a 3% penalty. Do I have grounds for going after my deposit part or whole????????? I will be consulting a lawyer, but want advice before I do.
I already am about to lose 18k, I want to make sure more money spent on a lawyer is wise.
I greatly appreciate any help. It took me a while to save and I dont want to start from scratch again. This sucks.
Does your contract contain a mortgage contingency? Does it say that you can take your deposit and walk away if you are unable to get a mortgage loan, as long as you actually tried to get it? It's entirely possible that the unit will not appraise at your contract price, thereby causing you to be rejected for your loan. read the contract.
Mot builders have a time frame build into their contract. Just as another poster has written. Since there wasn't an act of God or another terrible issue, they should have been able to close on these condo's earlier...If the prices have been lowered to new prosepective clients, you should at least got a lower contract, which many builder have done in the last 2 years....I would try to get your money back and by starting to write a letter to the CEO of the company and go from there. that doesn't cost a dime and see what the response will be.
Your first option is free. What does your contract say? When was your unit supposed to be finished? 2 years seems like a long time from date of sale to date of occupancy. Does your contract allow you to walk away if you cannot find financing or any other reason?
In addition, if the condos are selling for less, they should also APPRAISE for less. What bank is going to give you a mortgage for more than the condo is worth in this market? You should be able to get out on a financing clause.
Get an appraisal. If the condo doesn't appraise for your purchase price, you can't obtain financing. If you can't obtain financing, you didn't default because of something you did, and you should be entitled to your entire earnest money amount. Have you talked with a mortgage professional to see what your options are of being denied a loan for the sales price?
Definitely consult your attorney and take your contract with you so he can look for outs. You may also want to sit down with a Realtor not affiliated with the condo or your buyer agent if you had one.
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