buyers band together to renegotiate with builders

http://www.youtube.com/watch?v=yly2UDQp6fc

perfect...bds---need to expand your imagination. they are clearly not rolling over.

This kerfuffle amongst the buyers amazes me. All this anger at the developers and not at their own lawyers who did not insist or warn regarding the need for a mortgage contingency clause?

welcome to america where everyone else is to blame. i agreed, who cares? i agreed, I didn't mean it. I agreed, I didn't understand. I agreed, it's not fair. etc, etc.

come on bds---which one above is your song?

"This kerfuffle amongst the buyers amazes me. All this anger at the developers and not at their own lawyers who did not insist or warn regarding the need for a mortgage contingency clause?"

I came very close to buying a co-op in a prewar building in Brooklyn three years ago. My eagle-eyed attorney spotted a mortgage NON-contingency clause, which I had no idea even existed. He told me that of course I would get a mortgage, but the language was unusual to put in a contract, and that if God forbid something were to happen that would prevent me from getting a mortgage, I would be royally screwed because the seller could keep my deposit if I couldn't come up with the money for the full sales price on my own. I thought this was silly, and that of course the seller had no intention of doing this, but still I contacted the seller's broker and said I wouldn't sign until the clause was removed from the contract. Her broker assured me that her client had no intention of profiting from my misfortune in a worst-case scenario -- HOWEVER -- the cause wasn't coming out. I countered that if the seller had no intention of running off with my deposit if my financing somehow fell through, why was that clause in the contract in the first place? *Silence*.

I walked away from the deal.

Do not rely on oral assurances.

My point exactly, buyerbeware! Seriously -- if she had no intention of running off with my deposit if my financing fell through, why is that clause there in the first place? And if truly was "boilerplate", now that I've brought it to her attention, why would you not remove it?

Memorable quotes for
The Spanish Prisoner (1997)

Jimmy Dell: Always do business as if the person you're doing business with is trying to screw you, because he probably is. And if he's not, you can be pleasantly surprised.

http://www.youtube.com/watch?v=Sa4YFNbPje8

bds-maybe if you have to buy, Congress will give you a bit of cash for your clunker. CC, I am with you.

Riversider, love that movie.

it's been a sellers market for years- up until fairly recently. no financing contingency contracts came from multiple interest in properties where the seller had the strength to ask for and get a buyer that was a sure thing. financing contingencies have also been used as an excuse the get out of a contract even if financing isn't the issue- what's acceptable financing can be thought of many different ways and so its hard to disprove a buyers claim that they "can't" get financing. the paradigm certainly has changed but keep in mind its still a great risk on the seller side to lock up their property in a deal that they don't know will happen. if you were selling you would want some reasonable assurance a make future plans/ take property off the market/ etc.

mdb
the way around this is for the developer to specify one or two banks that the buyer must apply to.

Have any buyers explored voiding a contract due to Force majeure?

Have any buyers explored voiding a contract using MAC clause?

Sounds like a bunch of CRY BABIES. Falling real estate values do not give you the legal right to void a contract. I hope the developers win, as the contract law is on their side.

And, just curious, how would the buyers respond if RE values were going up and the developer threatened to walk away if you did not pay them more money???

http://www.chicagotribune.com/business/chi-0701160194jan16,0,520551.story
...

umm maybe he wishes he didn't do that...

alpine, the contract is simply a right to buy. You pay 10% now for the right to buy later. They're not walking out on the contract. If someone walks away, they're choosing not to execute the option. They are honoring their side of the contract. The developers, on the other hand, would be violating the contract if they did what you suggested, because the contract is simply a right to buy at a certain price.

This is all too similar to an investor buying a warrant and then complaining a year later when the option is out of money somehow feeling entitled to a lowering of the strike.

wishhouse, I think you're missing the point that buyers really are trying to get out of their contractual obligation, which, as you note, is to pay the 10% (or whatever other percentage) deposit in return for the option to pay the rest and close later. The frivolous Interstate Land Sales Act actions that have been mentioned in the press and on SE boards, as well as the groups of buyers organizing to try to hold up developers for concessions (tortious interference anyone?) and the more creative suggestions like invoking force majeure or a MAC (Q: What RE sale contract even HAS a market MAC that one could invoke?) are not about getting out of a closing (which all sides seem to agree the buyer can accomplish simply by not showing up), they're about voiding the contract and getting the deposit back.

The answer to alpine's rhetorical question is that buyers would respond by exercising their remedy under the contract, which is to sue to compel the developer to perform (i.e., to close). Just like in the current circumstance developers wish to exercise their contractual remedies under the option agreement and keep the deposit. I'm actually having a hard time seeing where you and alpine disagree here.

Ansidelinesitter Reference to MAC clauses and Force Majeure was sarchasm.. JC...

River - oops. missed that one by a mile.

River - oops. missed that one by a mile.

my bad. Too much Seven Wright
http://www.youtube.com/watch?v=UIHZDo9NBMk

"This kerfuffle amongst the buyers amazes me. All this anger at the developers and not at their own lawyers who did not insist or warn regarding the need for a mortgage contingency clause?"

This has been stated already, but I'll state it a bit differently: when a buyer gets a deal SPECIFICALLY BECAUSE they bid with "no financing contingency", and if they would lose the deal if they backed away from that deal point, how are their attorneys going to protect them? I know of PLENTY o attorneys who have for years had a standard speech which they always have given anyone who came to them with a no financing contingency deal about the risks, but since the buyer had been given all sorts of assurances from mortgage brokers, banks, etc. it always fell on deaf ears (since the buyer wanted the apartment).

and if they would lose the deal if they backed away from that deal point, how are their attorneys going to protect them

no different than being afraid someone would bid more $$$