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Bloomberg is reporting that condo owners of the still underconstruction Cosmopolitan Resort on the Vegas strip have sued the owner, Deutsche Bank, to get their deposit money back.
The suit illustrates the varying rules for getting down payments back even in projects with major problems. Deutsche Bank foreclosed on the $3.9 billion project. It’s offering buyers in the West Tower 74% of their deposit money back. Nevada law allows developers to keep 15% of a buyer’s down payment.
In court filings, condo buyers claim they have suffered through construction delays that now prevent them from closing. Building interiors were modified ten times and problems with drainage require 24 hour pumping of water beneath the building. Buyers claim the delays have eliminated their ability to get loans because real estate prices have collapse so much.
My Mom always said buy a condo when it’s under construction because you’ll get a discount. Of course, those “pre-completion prices” come with a big risk.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.