It’s no secret that condominium developers have built huge buildings throughout the South Florida area. One just needs to turn an eye toward the east where they will be greeted with high rise after high rise. While the beach front areas have always been a popular area for condominium development, the housing boom in the early part of the decade led developers to build condominiums all over Florida.
However, with the housing slow down and falling prices, many people want to “get out” of their contracts with condominium developers because money is tight and because the value of new construction has significantly decreased. In some instances, purchasers can get out of their condominium contracts if the developer has failed to deliver the unit within two years of the contract, unless the reason for the delay is subject to Florida’s “impossibility of performance” doctrine. (I’ll discuss this later on in another blog entry.)
In other cases, development is subject to the Interstate Land Sales Act, a federal act that requires registration with the Department of Housing and Urban Development. Within this statute, the developer has to satisfy many requirements but, at the same time, ILSA often makes it difficult for purchasers to terminate those contracts. However, the Code of Federal Regulations regarding ILSA can be used as a basis to terminate contracts (or seek damages under Florida law for deceptive and unfair trade practices).
Many developers, in an effort to sell condominiums, made various representations about the profitability of purchasing units at a particular development. Depending upon the nature of the representations about profitability or, for example, the language in which the contracts were originally prepared, purchasers may have remedies available to them that would be separate from whatever language is contained in the purchase agreement. Our firm is encountering more and more of these types of cases that require analysis under the federal regulations in order to determine a purchaser’s rights.
This article does not constitute legal advice or the formation of an attorney-client relationship, and is not for re-publication without express permission of the author.