Signed contract and developer cuts prices of unsold units

sydney:

As for a), there is very little you can do other than what is provided for by the boilerplate language in your purchase agreement and initial offering plan.

As for b), only you can make the decision - it's impossible for anyone else to offer a worthwhile opinion not knowing the cost, the location, the building, the specifics of the unit you're buying in the building, your mortgage specifics, your financial situation, your time horizon, your future plans, your stomach for risk/reward, etc., etc., - there's just way too many variables for any of us to wade in with meaningful commentary.

Unless you really want to lay it allllllll out on the line - but I think that's probably not a great idea......

Thanks for your thoughts #2. You're right - all depends on specific circumstances. Perhaps feeling a bit of buyer's remorse and a knee-jerk reaction to what we perceive as a devaluation of our investment (hopefully, temporary!)

What developement is this?

I have to be honest - I'm a 'believer' in well invested Manhattan residential real estate, but having said that I don't think the 'devaluation in your investment' will be as temporary as you would like it to be. I do think Manhattan residential real estate will decline in value from levels we're currently experiencing. But the issue is that some areas will be hit much harder (and devalue much more) than others, and when prices eventually do come back (and they will, of course, but when is the issue) some areas will snap back much quicker than others.

To # 1.

For your point(a). If the price of your unit increases after contract, do you cut a check to the developer for the amount they have lost? You can't expect to have it one way in America!

(a) Whether there's anything we can do to stop the developer further discounting those unsold units - it devalues our purchase. I don't really see any legal recourse in our contract.

Sydney, it happens from time to time, get a good attorney, he/she would be able to work out a deal with the developer in your favor.

You have to read every page of your offering plan to make to see if you can get out of it. i.e. If the sponsor does not complete the project by a certain date you might be able to back out.

Read the architect and engineer report to make sure the sponsor does everything their suppose to. i.e. the appliances are what they say, the finishes are what they're suppose to. etc.

If they're not - you should make a big stink and say discount me, etc.

Granted you might have to take this all the way to the walk-thru but there you can say this is not what you expected. I thought it was suppose to look like this.

Lastly, leave out some income and maybe some zeros off on your mortgage application.

Regarding #8 above:

The first suggestion is the best. Most initial offering plans have a clause stating that if you can not close on your unit that you have a signed purchase contract for by a certain date because the builder cannot deliver (no TCoO, et.), then there is indeed a window of time - usually only two weeks long(!) - where the purchaser has the right to rescind the contract, receive their 10% deposit amount back in full, and walk away. That may be one reason the builder is in such a such a rush to sell the remaining units - if the builder has not sold a certain percentage of units, he will not be allowed to close because the offering plan cannot legally be declared effective.

As for appliances, etc., all purchase contracts allow builders to substitute appliances, finishes, etc. of approximately equal value and quality (and that can be interpreted very loosely from a legal perspective). Making a stink is a waste of time, and forget about a discount. Saying "I thought it was supposed to look like this or that" at the walk-through isn't going to accomplish anything unless there is such a massive difference (like you're missing a bedroom or a bathroom, or there's no kitchen at all, etc.) that your lawyer tells you that your case is rock solid. Pestering the builder because the cabinets are a different finish/color, or the floor is a different wood, or whatever will get you nowhere.

And lying on your mortgage application is 1.) illegal, and 2.) just means you won't get accepted for a mortgage. But as most offering plans/purchase contracts have no mortgage contingencies, all that means is that you'll lose you 10% deposit AND be refused for a mortgage. There's no advantage to you.

if prices were decreased by 15-20% (assuming similar type of units) and assuming you put 10% down, than you should back out and enter into a new contract for the same/similar unit - you are down 10% of your deposit but then you enter at 80-85% of the initial price hence you buy the same/similar unit at 5-10% discount. not sure if the developer would like that...

Smart.

#9 - From experience I know of a sponsor who put in top of the line GE appliances when the plans called for Viking and Subzeros.

They even use different materials on finishes because they said "due to their expert opinion" they felt the changes was of better quality.

I found this all out during my walk thru and I told them this was all BS. The Sponsor was just obviously trying to save money in the end and was cutting corners. I said I'm not closing until they follow the plan. They used the stupid "out clause" you mentioned but I wasn't budging.

The next day I had my lawyer send them a letter to replace the changes or give back my deposit. No response for two weeks. Soon after I had my lawyer file a lawsuit and they immediately settled for a decent amount of cash. At that time I could have backed out but didn’t because I liked the place itself.

I basically got credits for the appliances but made out on the finishes. So, there is a possible way out as in my case.

I can only speak for my offering plan but if I wasn’t able to obtain a mortgage on my own I was required to apply for a mortgage using their bank or lender. And forgetting or mistakenly leaving out income is not a crime.

#12:

You describe a very interesting, but unusual, experience. "Good for you," I say, for really sticking it out and making things work to your advantage. I still don't think that, in general, what you describe is the norm, but it's great that you hung in there. Well done!!