Walking away from down payments

The attorney general is not going to help you recoup your downpayment unless there is fraud. If you want your deposit back, then you must hire your own attorney. And your chances of success are VERY small. I know it is not what you want to hear, but your deposit is gone if you do not close.

Boy, it seems like a TON of condo buyers are walking away from their deposits!! You are definitely not alone. There have been numerous threads about this.

By the way, if anybody on this website says "don't walk away" without offering any constructive advice, I would probably discount their advice - probably brokers/owners/developers - but I don't need to tell you that.

The related thread is:

http://www.streeteasy.com/nyc/talk/discussion/7292-should-i-walk-from-my-deposit

From what I have read here, the only people who have gotten some or all of their deposits back won't exactly say how they did it.

Unless the developer misses a hard deadline or something in your contract, there is little hope for a refund.

There are only 2 ways where you can get the deposit back:

1. The project is late

2. The final product is inferior to the product you were promised (and don't get your hopes up on this one because it will take years of litigation to prove it).

4720 - it hurts. I am not going to lie. My wife and I walked away from 130K this past year. The AG will do nothing for you. We've spent many many thousands this past year on attorney fees and the latest word is that we might get a tiny percentage of the deposit back - in itty bitty chunks for the next 30 years in the form of a tax break - maybe, maybe that will work out. Is all that extra expense worth it? Talk to me in 30 years. It's your gut against the world. That said, I am so happy we are not in that new construction hell hole we thought was so charming a year ago. We're still looking for our dream home. And we still think about that 130K every time we run numbers. Good luck. Your dream home is out there.

Alpine is correct. This is not an AG issue. You signed a contract. You made a payment. Legally your only choice is to walk or to go ahead with the purchase. It is extremely unlikely you will be able to get your deposit back, barring bad action or a missed deadline on the part of the seller/developer.

look on the bright side---if you had not spent your money on the deposit, you probably would have invested it in the market and lost at least 1/2!

"Boy, it seems like a TON of condo buyers are walking away from their deposits!! You are definitely not alone. There have been numerous threads about this"

Crain's put this number at 10% of buyers... the article got posted to the board I want to say 2 weeks ago...

"look on the bright side---if you had not spent your money on the deposit, you probably would have invested it in the market and lost at least 1/2!"

Boy - this is an interesting site. Lots of people with misinformation. My firm is in Washington DC and we have done some advisory work for an lawyer referral group called No-Condo.com. We are monitoring commentary and their web team told me about this site. Our firm is not doing work in NY, but No-Condo.com is using a highly reputable NY law firm to pursue cases in NY. They show up on the No-Condo.com website - www.no-condo.com. Our firm specializes in the laws that these firms are using to get people out of their contracts and you often can get out depending upon the number of units in the building and when you purchased. It is my understanding that the firms that work with No-Condo do so on a contingency fee basis. No one seems to be very fond of attorneys, including me - and I am one. However, my thought is that getting back something instead of nothing is a good thing. Good luck with these issues.

Why can't you just close on it and flip it? I thought Manhattan real estate only went up...

He can't close on the unit. He got priced out FOREVER.

Wait, I thought I made up all the walking away from deposit stories?

Maybe it would be more useful if you posted some content other then a thinly veiled ad for DEWEY SCREWEM AND HOWE. No one is asking for the super secret Laws you are using to get people out of contracts, but perhaps addressing some of the misconceptions would be valuable.

BTW I"m all for specialization, but NO-CONDO sounds more like a marketing plan then expertise.

I was just brought in as an adviser by someone on this board who was looking at walking away from their {mid-seven-figure} new development closing. I was not this person's broker, I was not working for the developer, and I did not take a consulting fee -- so I had NO financial stake in the question.

I did some valuation legwork, told him that his apartment had probably dropped 10% in value since he signed the contract, and using that information, he just closed.

You obviously have to assess your own current financial situation, but as a generalization, I'd say if you still have a job, go ahead and close.

Otherwise you are just making a bet on the direction of real estate prices and interest rates.

ali r.
{downtown broker}

I think you must also consider the state of the building. The % of units sold, the state of completion of the project, financial condition of Sponsor are all very important factors. I don't think you can proceed blindly. I would suspect the Sponsor will not have 5 replacement buyers lined up to buy your unit if you decide to walk, so by refusing to close you open up the possibility for some negotiation with your Sponsor.

"Otherwise you are just making a bet on the direction of real estate prices and interest rates."

Frankly, both of those are easy bets to make. We all know where Manhattan real estate is headed. Interest rates will be stay low, perhaps even lower with some good ole Japanese-style QE, until we are out of the financial mess - and that ain't happening anytime soon.

"We all know where Manhattan real estate is headed."

We do? Didn't most purchasers who signed contracts a year ago think that they knew then?

I've got no dog in the fight as to whether the OP closes or doesn't close. I just think it's flawed that the psychology of new development buyers seems to be to always project the present: a year ago, they thought that real estate would keep going up, and now, they think that real estate will keep going down.

ali r.
{downtown broker}

You might try renegotiating the contract, but only if your developer has sent out the closing notice. If they haven't, they can delay the closing until the real estate environment favors them, but if they have, you are in a position to renegotiate based on the current prices that they are advertising for the very same apartment. Look at the numbers and see if it makes sense. If the developer stands to lose money if you walk, and they are forced to sell at a price that is lower than the differance of your selling price minus your down payment, then you may have some leverage to get some of it back. Good luck

"We do? Didn't most purchasers who signed contracts a year ago think that they knew then?"

Just because some people were stupid a year ago...

" I just think it's flawed that the psychology of new development buyers seems to be to always project the present"

I'm not projecting the present, I'm projecting the 100% run-up in half a decade and the loss of tens of thousands of high paying jobs will demand a severe correction in the market. Sounds like YOU are the one projecting here...

"but as a generalization, I'd say if you still have a job, go ahead and close."

Ignorance is bliss.

no condoms?

Doesnt the building have to be 70% sold to be deemed effective? And if the condo is not deemed effective dont you get your deposit back?

dman: "Maybe it would be more useful if you posted some content other then a thinly veiled ad for DEWEY SCREWEM AND HOWE."

Actually, it's Dewey, Cheatem & Howe.

Thanks slope11217 has it right: Cheatem.

Any one have any (useful) suggestions on how to get out of a new development contract?