Editor’s note: This article is reposted with permission of The Real Deal. Click here to view the original article.
By AMY TENNERY
NEW YORK — It’s often said that the devil is in the details — and for many New York City buyers and sellers, that’s increasingly become the case in the down market.
New development brokers and real estate lawyers say many of the attempts they are seeing among buyers to get out of contracts are from those arguing that the measurements on their condos are different from what they were promised. They say that sometimes buyers will invoke the claim over a minor quibble, such as small floorplan discrepancies or an inch or two difference in ceiling height.
Meg Goble, a real estate lawyer and a partner at Hanley & Goble, said buyers must prove that there are "significant and material" differences between the representation made to the buyer and the finished product. However, there is little spelling out of exactly what that means.
"That’s the problem with the words ‘material’ and ‘significant’ — what’s material is sort of a very subjective question," Goble said.
Goble said it’s extremely difficult for buyers to get out of a contract over a floorplan discrepancy, even when they can prove there’s a legitimate difference in their new home. She said she represented one buyer who recently had success after proving that the entryway ceiling was lower than promised. While the ceilings in the entire unit were supposed to be 11 feet, the height above the entryway was several inches lower.
Still, even with her one successful case, the process wasn’t easy. The buyer ended up purchasing a different unit in the same building, which Goble said greatly helped his chances of reneging the original contract. …CONTINUED
While bringing a floorplan claim forward may be a tall task, sources say the claims have increased significantly as nervous buyers have scrambled for ways to get out of their agreements.
Eva Talel, partner at Stroock & Stroock & Lavan, who mainly represents co-op and condo boards as well as sellers, said that while floorplan disputes constitute a small percentage of the contract tiffs she sees, she never saw them before the economic downturn.
She, too, said many of the claims aren’t legitimate. She said in addition to seeing buyers trying to use the claims to walk away from deals, she’s seen some try to negotiate a better price. "These [claims] are negotiating ploys just as much as anything else," she said.
One source told The Real Deal that the Artisan Lofts at 143 Reade St. in Tribeca has seen several buyers trying to get out of contracts. But Barrie Mandel, a senior vice president at the Corcoran Group who represents Artisan Lofts, said there were no floorplan disputes at the building.
Still, Mandel said she faces buyers who aren’t always happy with their layouts after signing the contract. She said buyers sometimes don’t "realize a particular part of their loft would look the way it would when it was built. One person said, ‘Well, I didn’t realize the air conditioning duct would be there!’ "
She said she’s seeing more buyers who can’t meet contractual obligations for financial reasons — two at Artisan Lofts are having trouble — and noted that she’s sympathetic in those cases. Another source, who asked to remain anonymous, said the Rushmore at 80 Riverside Blvd. is seeing buyers try to wriggle out of done deals. Calls to the Rushmore sales office were not returned.
Carol Friedman, a senior vice president at Nestseekers, said she’s lost deals at 255 East 74th St. and the District condo, when clients backed out of contracts at the last minute because of financial constraints. She said those cases weren’t related to floorplan disputes.
However, given the number of buyers she sees who are incapable of meeting their contractual obligations, she said it’s not surprising that they are invoking floorplans to get out of deals. "Honestly, if you were in their spot, (you) would do the same," Friedman said. "I think anybody in a desperate situation would try."
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