Extell told to release 41 buyers from condos

Hmmmm why would ppl walk away from re? You should be beating them back with a stick. No worries there'll be 41 core borkers to buy it at ask.

He lost $95mm in sales. Wow.

"Earlier this month, in an interview with Crain's he said that the date was just a typo and that buyers were using it as an excuse to back out of their deals. He maintained that buyers only wanted out of their contracts because of the downturn in the residential and financial markets."

So the most important date on the contract (when closings would begin) was a typo?
Does he think anybody believes him?
The stuff these people get away with is just mind boggling...

Why is the AG invovled in these types of cases? Shouldn't Cuomo be more concerned about prosecuting crime?

This is crime, he tried to steal 15mm dollars.

Next is the fraud case.

yeah, I agree. Getting someone to honor a sales contract they voluntarily signed while the market was going up is fraud. Right up there with Bernie Madoff. SARCASM OFF.

Yes. Extell voluntary signed a contract they drafted giving folks the right to rescind if occupancy did not occur by Sept 1, 2008. They didn't comply and the AG reviewed and decided for the purchasers. Apparently this has made some poster angry. Odd.

The only person who didn't honor the contract is Barnett. You can read the whole ruling here. No sarcasm needed to understand it.

http://therealdeal.com/newyork/articles/attorney-general-andrew-cuomo-orders-extell-to-refund-rushmore-buyers-developer-gary-barnett-talks-about-the-building-future

We all know the buyers wanted out because the value of the apt. went down, not because the closing was late. if the market was going up, would they have asked for their deposits back?

Here's a few choices. You are angry buyers are getting money back from Extell, because:

a. You own in the Rushmore and are taking a big hit on this ruling. Reasonable for you to be angry.
b. You are a broker and don't like buyers winning these type of filings. Scummy...but your a broker some not unreasonable to be angry.
c. You are Gary Barnett. Yeah..you can be angry.
d. You detest 41 other people getting their hard earned deposits back that they are legally entitled to because you missed out on a "told you so' schadenfreude morally superior moment. Then you are an a-hole.

Pick one.

Since you know what's going on el presidente, then you must know that the sales office lied about the number of units sold, and number of investors that purchased in the building. And when many purchasers tried to close, they could not because the appraisal was below purchase price (because investors got a 12% discount), and lenders wouldn't lend to the building. Then sponsor tried to take their full deposit.

So suck it. Gary got what was coming to him. If he had played fair, many buyers would have closed with a moderate discount. But he didn't. He played hard, and lost big.

The Real Deal has the actual AG ruling posted (link below) - to those that continue to call this a "typo" look at Footnote4 on Page 13!

The paragraph below is lifted from a commenter on The Real Deal:

Per #9 - here is footnote #4 in its entirety: "Notably, there is other evidence that the selection of hte September 1, 2008 rescission date was not a typographical error. Sponsor's initial proposed offering plan has the same language of the Provision but with a February 1, 2008 date for both the First Closing and the right of rescission. In addition, counsel for certain purchasers of units in the Condominium has submitted an offering plan for the Avery Condominium in which an affiliate of Sponsor is the sponsor. In that offering plan, the sponsor specified a rescission date six months after the projected first closing date, which underminds Sponsor's contention that no sponsor would ever choose a rescission date earlier than the 12-month period permitted in the Regulation. In reponse, Sponsor state to this Office that the date in the Avery offering plan was also a mistake. Although each of these situations might be a mistake (a matter not free from doubt), a sponsor must abide by teh language that it chose in its offering plan."

http://therealdeal.com/newyork/articles/attorney-general-andrew-cuomo-orders-extell-to-refund-rushmore-buyers-developer-gary-barnett-talks-about-the-building-future/comments

Did the lawyer representing the buyers get a 1/3?

RS, maybe they should have filed pro se?

alpie, the AG is involved because it's in their job description.

http://www.youtube.com/watch?v=tKlWGZHEO7Q

another youtube. surprise, surprise.

does extell even have the cash on hand?

Is aboutready planning her next vacation? Tough week this past week, the first back from a two week vacation. You had to blog extra to make up for being without a Wifi connection in Latin America.

Oddest part of the report was that Extell says they already resold some of the units. How could he resell units with a deposit?

http://www.nytimes.com/2010/04/10/nyregion/10ruling.html
Reached by telephone Friday night, Gary Barnett, the president of Extell, said that the building was finished and more than 50 percent sold.

“It’s a beautiful, spectacular building,” he said. “I think personally that any of these people who don’t turn out to buy at the Rushmore will regret it.”

He added that some of the affected units had already been resold.

According to an earlier article, the buyers' lawyer has papers that seem to indicate that dates were changed in a fraudulent matter. If fraud is proved, do the buyers that purchased after this case was filed have any recourse if the values of apartments significantly drop due to these buyers opting out?

That is, if Barnett knew it was not a typo, if he had lawyers change papers knowing that if the contracts were rescinded it would adversely affect prices and yet stepped up his marketing to unload apts as fast as he could while case was being decided, would a subsequent buyer have a case?

polydoa: "The stuff these people get away with is just mind boggling..."

Umm, I thought the point of the Crain's article was that they didn't get away with it...

sls: if there was fraud committed and all he has to do is simply return the money that he was contractually obligated to return over a year ago, then he did get away with something. If he had that flood of apartments returned to the market in the depths of the financial crisis, prices would have been depressed far more than they are now and he would not have been able to do the big marketing promotion and sell more apts than any other building last year. So he indeed, did get away with something.

He stonewalled -- able to use the buyers money for all those months and buy himself time to get himself out of trouble. Yes, this fraud definitely paid to his advantage.......so far. I hope all those buyers who had their money withheld illegally flood him with lawsuits. After all, they didn't have the advantage to use their own money during one of the great moments of investment history.

Barnett would say he followed the law. He believed the error minor and returned the money after the A.G. ruled on it. It's also true that the buyers would not have complained if prices rose. That said, this is no different than what goes on every day, in contracts between individuals and corporations. Nothing new here.

yes, RS, in contracts between INDIVIDUALS and corporations you often find things that are askew. balance of power and all that.

or contracts between corporations and corporations. or between individuals. Using the contract language to avoid a bad deal is nothing new...or to force the other party to adhere. This is why we hire lawyers.

no RS. corporations and corporations? much more likely to be litigation.

why do you think landlord/tenant law has so few victories for the tenants? power. or lack thereof.

The law favors the tenant. Anyone who has ever had a deadbeat tenant will tell you that. It can months upon months to get the bum out.

Amazes me when anyone takes their savings and invests in a rental property. You make one mistake renting the unit out to a deadbeat and you might have no income the entire year while waiting for the legal system to work.

Right. Sure.

RS: If this was a mistake, then yes the party has the right to adhere to the contractual agreement and await a determination by the correct authority. However, according to statements by the buyers' attorney there may have been fraud committed. If that is the case, then the developer deserves to be skewered. The buyers would have had to adhere to the agreement if the developer met all his contractual obligations regardless of whether the market went up or down. Unfortunately it is very difficult for individuals to undertake the financial stress of legal action and that is where the balance of power between individuals and corporations rests.

Apt23. The buyers attorney is an advocate of a position. These are facts best determined in a court of law. It sounds to me like a mistake, however both Stroock & Extell reviewed the documents. The court ruled in favor of the buyers and I believe this was the right decision. I don't see this going any further.

Have you seen Rushmore? There's a skeleton staff of maybe one concierge at most. No doorman, no porter, no security. I wonder if they even spent money on union employees.

The building is not high end. The buyers got lucky. The units are not worth a premium to the nearby buildings.

I wonder when Extell will update their sales numbers and admit that the 54 apartments streeteasy shows as being in contract will never close. Will they have the cojones to re-list them at $1500/sq ft?

Developers always exaggerate sales. so never.

I wonder what the sales office said to buyers this weekend.

I wonder what buyers who closed under duress are thinking.

Someone should go visit and report back.

When I visited shortly after the lawsuit, the broker told me that there was no merit to the suit whatsoever and it would not affect prices at all. Then they escorted me out of the building immediately. I'm sure they said the same to buyers for the past months and they probably have no legal liability. There was a clause in my contract on my Miami condo that stated -- in very fine print buried deep in the text--that the developer was not responsible for any representation made by the broker.

the broker told me that there was no merit to the suit whatsoever and it would not affect prices at all. Then they escorted me out of the building immediately.

LOL. They voiced a worthless opinion and made sure you wouldn't ruin any other sales they might make.

Apt23, I guess this means you weren't part of the class action.

Nope, RS. I have learned from shopping for investment property in Miami and Las Vegas that if something smells a little fishy with a developer, then run don't walk because in almost all cases, those developers continue to stink up the joint for years. Just look at One Madison. There was always something weird there. And defenders kept popping up.

I don't agree with you that this AG ruling won't have repercussions. The jury is still out but I think there might be a lot of law suits to come. I wonder if they have the cash available to pay the buyers back. Barnett seems to pay fast and loose with the rules.

No idea APT23. Seems the A.G. has provided legal remedy.

Aldyn marketing will be interesting. I believe Extell's construction costs will be 20% lower before considering that this is a lower cost product. Rushmore will be what 1/3 sold and competing with units offered what may be substantial per square foot discounts. Will buyers pay up for higher quality finishes for the same neighborhood and views?

I would love to buy one of the 3br/3bath 1700-1800sqf apt for 2mil. Anyone know if the sponsor would go that low? Thnaks

http://amlawdaily.typepad.com/amlawdaily/2010/03/stroock.html

Stroock's profits per equity partner dropped to $1.067 million from $1.185 million in 2008 and $1.296 million the year before, according to the numbers and our prior reporting. Overall, profits have dropped about 18 percent since 2007. Gross revenue fell to $263 million in 2009, a 5 percent drop from the $277 million Stroock brought in during 2008 and a 10 percent drop from Stroock's high-water mark of $296 million in 2007, the numbers show. The $263 million Stroock earned in gross revenue is just $5 million more than its 2005 revenue figure, our numbers show.

Harvey Brown, Stroock's longtime executive director, says he is "disappointed" but not fazed by the numbers. The firm's transactional and real estate practices--with the latter being one of Stroock's historic centerpieces--both remained down in 2009, and the firm projected a dip in revenue and partner profits at the beginning of the year. The numbers "are almost exactly what we expected," Brown says. The bottom line of gross revenue isn't as crucial as some other numbers, Brown says. "Profits per partner are really all that matters," he says.

"Why is the AG invovled in these types of cases? Shouldn't Cuomo be more concerned about prosecuting crime? "

Perhaps because there was a prospectus/"Public Offering" which needed to be approved by the AG office to begin with, and if it was a case for shares of stock in a corporation, they would be involved in those cases as well, and because there's a whole department in the AG office which deals with Coop and Condominium compliance?

Unfortunately for some reason the dates the contract was signed is blacked out. To me, that's an important part of the issue; "morally" if not legally. For example, if someone signed after April 1, 2008, to me it would be very different than someone who signed November 1, 2006.

imagine if you had told folks 5 years ago that folks would be fighting for their lives to get out of RE contracts.... none would have believe you.

During the Hunt Brothers' silver bubble, as prices were peaking, the public was on line to buy and not sell. History doesn't repeat, but it sure rhymes.