Classic Effects of Non-Contingency Contracts

By now, many of you have commented and queried about the down-payment situations that buyers are finding themselves with. This is a classic situation that homebuilders have planned for - despite a perceived "hot" market - and buyers have not thought out.

The situation in this article is very common but I believe that the government's efforts to fix the housing crisis will begin to encompass issues like this as well.

If I were Toll Brothers, I would prepare for some compromise in the coming months. Good lawyers are finding ways to bring these contracts to "more acceptable" closure.

Up In Smoke: The Deposit Vanishes
New York Times
March 20, 2009
http://www.nytimes.com/2009/03/22/realestate/22cov.html?_r=1&hp=&pagewanted=all

New Jersey’s Unemployed Reach Record Numbers

New York Times:
March 25, 2009, 5:15 pm

New Jersey’s Unemployed Reach Record Numbers

By Patrick McGeehan

The rising tide of unemployment that has been sweeping across the country has officially reached the New York suburbs. For the first time in this recession, New Jersey’s unemployment rate has surpassed the national rate, the state’s Department of Labor and Workforce Development reported on Wednesday. New Jersey’s jobless rate jumped to 8.2 percent in February, from 7.3 percent in January. The national rate was 8.1 percent in February.

There now are more unemployed people in New Jersey — about 370,000 — than at any time since the state began keeping records in 1976, the department’s data show. The number of employed residents with jobs — 4.14 million — was the fewest since mid-2004.

“The troubled national economy continues to pose difficulties for many states including New Jersey,” said state Labor Commissioner David J. Socolow.

New Jersey lost more than 30,000 jobs in the first two months of 2009, including almost 20,000 in February, according to the report. The state’s unemployment rate has risen for 13 consecutive months.

Professional and business services accounted for more than half of last month’s losses, about 10,000 jobs, and has shed 42,700 jobs in the last year, the report said. The only sector of New Jersey’s economy that did not lose jobs was education and health services, which gained 13, 600.

The 12-month leap in the unemployment rate was the biggest ever. The state’s unemployment rate had never risen or fallen by more than 3 percentage points in any 12-month period in at least 30 years.

New York state, where the unemployment rate was 7 percent in January, is scheduled to release February figures for the state and New York City on Thursday.

Contingency Clause - No Longer Only Way Out

According to the following excerpt from the web site of a regional law firm, buyers are being offered many possibilities to rescind their contracts and salvage their deposits. It seems that a new cottage industry is about to be born surrounding the opportunistic timing of developers' management of project completion.

While this has been a topic of much pain for locked-in buyers to close, a number of loopholes have been found to fight back - even long after the closing!

"Purchaser Rights

Your deposit may be refundable or your transaction may be rescindable.

You might be asking yourself: How exactly can No-Condo.com attorneys get me out of my condominium purchase?

If you have not yet closed on your purchase, your deposit may be refundable. Additionally, if you have already closed on your purchase, your transaction may be rescindable.

The short answer is that there are many federal and state consumer protection laws which entitle real estate purchasers to particular disclosure rights from developers. If developers fail to provide purchasers with particular disclosure documents or information, a purchaser may be able to get out of their purchase agreement. These laws apply to new construction condominium and other real estate purchases with condominiums being the easiest to evaluate.

The long answer is that the Interstate Land Sales Full Disclosure Act (sometimes to referred to as ILSA or the Interstate Land Sales Act) affords purchasers many disclosure rights and/or completion date rights, which if not granted to purchasers have been interpreted favorably by court decisions to afford purchasers the ability to get out of their purchase agreements. These rights apply to deposit refunds before closing and the right to rescind the purchase and get your money back after closing.

For example, if a condominium includes more than 99 residential units and the developer has not registered with HUD or has not obligated itself to complete your unit within two years from the date you signed a contract, you can cancel the contract and get a refund of your deposit. These rights extend to up to three years after purchase. Even if the developer has attempted to comply, the exacting requirements are often misapplied allowing for you to cancel your purchase or for post-closing rescission rights. Additionally, depending on your location, there are numerous state laws which must be complied with, that can also enable a purchaser to get their deposit back.

Contact No-Condo.com to find out if you have a case."

Read on...
http://no-condo.com

The Next Hoboken RE Shoe To Drop - Starts With a "W"

It has become abundantly clear that our first poster child Maxwell Place locked in abstractly high pricing due to the timing of its construction and closing dates. The result is a (barely) half-constructed development and its associated amenities.

The accelerating credit crisis and employment fears will have an even greater impact on a loftier bubble atop the W Hoboken Hotel. The portion attributed to private residences are beginning to emerge on listings as resellers contemplate their odds of remaining above water during the oncoming onslaught.

The marketing of these units has been kept very opaque so as not to drive any present contracts into contemplating walkaway strategies. But the writing is on the wall. And walkaway strategies are beginning to break traditional bounds.

As closings come due, the percentage of unsigned obligations will put a strain on what is one of the riskier RE projects in Hoboken history. How the developers, their partners and associated financiers handle these circumstances will prove to be a valuable lesson in marketing and crisis management. This site will track and reveal the same level of cost analysis already revealed in the MP situation.

Stay tuned... after all, it's a matter of cost - per square foot that is!

Renters Were Smarter... And Wealthier!

This comes as no surprise to followers of this blog, but a paper by David Rosnick and Dean Baker at the Center for Economic and Policy Research (CEPR) concludes that those who have been renting over the last five years are now wealthier than those who own their homes.

So much for those facts distributed by real estate professionals about how wealth is complemented through home ownership.

The CEPR also found that people who were renting homes in 2004 will have more wealth in 2009 than those who were owners. That's true for all five wealth groups the study analyzed, from the poorest to the wealthiest.

CNNMoney.com's coverage of the report:
http://money.cnn.com/2009/02/25/real_estate/boomer_wealth_evaporating/index.htm

CEPR's report:
cepr.org