Flap of luxury: Condo buyers want their money back

3/1/09
real estate
By Garett Sloane

Flap of luxury: Condo buyers want their money back

Photo credit: Urbanite

Bernard Urban wanted out of his deal to buy a condo at

William Beaver House, and instead bought a place at 20 Pine.

(Dave Sanders)

By Garett Sloane

gsloane@am-ny.com

Bitter condo buyers are bombarding the state attorney general’s office with petitions to force developers to return their deposits, claiming that the condos delivered at closing were not up to snuff.

The attorney general handled 168 deposit disputes in 2008, up from 57 in 2007. Aggrieved buyers make up most of the 74 complaints filed this year through Feb. 20, according to the attorney general's office.

One of those disgruntled buyers is Bernard Urban, an advertising executive who was all set to close on his luxury condo at William Beaver House, a new building in the Financial District. Urban said he got nervous when he had to wear a hardhat to his walk-through in early December.

“When I did a walk-through the punchlist was like ‘War and Peace,’ ” Urban said, referring to the list of flaws that the developers must fix before the owner moves in. His complaint to the attorney general describes the building as something less than the “Ultimate Downtown Address” that was advertised. Urban claims his condo was delivered in terrible shape — rough around the edges, literally, with a jagged metal shower drain.He said many amenities were missing: There was no “Penthouse Sky Lounge,” no indoor/outdoor fitness center, no sauna, no outdoor squash court, and on and on.

Instead of closing on the unit, Urban bought a place around the corner at the luxury condo 20 Pine, and is trying to get his nearly $150,000 deposit back from William Beaver House.

A spokeswoman for the developers of William Beaver House said they would not comment for this story. In a letter from an attorney representing William Beaver House, which Urban shared, the attorney Ruben Ravago of Kramer Levin Naftalis & Frankel strongly insisted that the developer had met all of its obligations. The letter also noted that a delay in amenities was outlined as a possibility in the offering plan.

The rise in deposit disputes with the attorney general is a sign of the sinking condo market, observers said. In some cases, buyers who put down deposits when the units were worth more don’t want to go through with their deals, according to Stuart Saft, an attorney and chairman of the Council of New York Cooperatives and Condominiums. Also, some buyers have trouble securing financing.

Real estate attorneys in the city said that buyers would have to show that developers were in breach of the offering plans to win their deposits back.

“The noncompletion of the amenities doesn’t take you out, because most offering plans allow for a delay process. Now, the questions of switching amenities — that’s a different thing,” said Jose Rivera, an attorney who represents developers and condo buyers. “If you’re dealing with someone who may say: ‘I’m still delivering your gym and your storage area, but it’s going to take six months.’ That’s not uncommon.”

William Beaver House is not alone in the complaints department and even the condo Urban eventually bought into, 20 Pine, has had its detractors. That project has been criticized for reported delays on delivering amenities, but Urban said at least he’s confident the amenities will come. Other projects have been poisoned by bankruptcy, such as Rector Square, where the developer reportedly abandoned the condo conversion in mid-construction while tenants continue to live there, at one point without heat and hot water for several days.

The attorney general’s office would not comment on the disputes it is resolving or the reason for the jump in filings. However, of the 168 disputes filed in 2008, 3 to 1 were from buyers, and in 2009 4 to 1 were from buyers, while the others were from developers.

It’s an issue that the office is clearly grappling with. Rivera said he was at a seminar in January that was attended by top officials from the attorney general’s office. One panel discussion in which the disputes were discussed was called “The Economy and Offering Plans and Navigating Troubled Waters.”

His firm, D’Agostino, Levine & Landesman, is handling dozens of disputes, representing mostly developers. The firm typically handles only a few a year.

“When things were good, everyone was closing. There were no issues and there were no complaints,” he said.

Not every condo buyer is dissatisfied, however.

“Development has been slow, but it’s still a great apartment. I kind of want to strangle people who complain about it. Look at your lifestyle. It’s not that big of a deal,” said Jason Samonte, who lives at 20 Pine.

Andrew R. Breiner contributed to this story.
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