RSS FeedHow Are Those New Condos Coming?
PQ Living reader Brian, pointed us to a local real estate development blog’s thread commenting on the Madrigal Lofts project in Mount Vernon Triangle experiencing difficulty with purchasers trying to get out of their condo contracts. (We’ll take this opportunity to remind readers that signing on the dotted line of any contract is a legally binding action and you need to consult your own legal counsel if getting out of a real estate contract is something you are considering). We did a little digging of our own (pardon the pun) and discovered a situation that illustrates an unfortunate example of how new project development problems can delay the delivery of new condos and cause purchaser worries.
According to the September 14 WBJ article, Glen Construction was building the Madrigal Lofts for Quadrangle Development and The Wilkes Company and was 85 % complete with the project. Fine. Unfortunately, Glen is running out of money and expects to close its doors by the end of 2007 meaning the developers are on the hook to finish the project. Not so fine. The Travelers insured the project and determined that completion should be bid out to and carried out by another company, Foulger-Pratt. The only consolation to condo buyers is that the Metropole, which sits half completed in the heart of Logan Circle and 1010 Mass Ave suffered the same fate. 1010 Mass appears finished as Faison, the developer, took the project back into their own hands to get to completion.
For those of you who’ve been to Tysons, Glen built the iconic “Shopping Bag Building” on Towers Crescent Drive. Facing a flailing real estate market, developers will not be willing to let purchasers out of contracts easily as the resale value will not make up for the inconvenience required to remarket and sell the contract. Purchase contracts for condos in new developments typically state that the developer has up to two years to deliver a property before the purchaser can legally cancel the contract without penalty. With new real estate projects for sale in a decelerating property market, do read the fine print and buyer beware.
Completed or not, readers are welcome to share their stories about their new property purchase experiences.
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Comments
In the contracts, are there typically clauses that identify some sort of time line for project completion? For example “if the purchaser can not move in by X date, the contract is null and void.” What’s the recourse for a buyer who is contractually obligated to purchase but has to wait an unreasonable amount of time for the condominium?
Tim – that timeline is two years from the date of signing the contract. you can always try to negotiate a change in the language as you suggest but new projects typically work from a template contract with the two years “preprinted.” the dynamics of the market have changed since 2003/2004/2005 so sales agents might be willing to entertain a shortened contract window. maybe someone reading can shed some light on this one.
Hey PQres,
Thanks for the reach on my Madrigal Lofts article…I have been reading your blog for a while now and its great to see the info you are providing to your readers.
I thought I would post on here because one of our former development clients is going through the same experiences. The Beauregard on U St has lost many of their purchasers due to delayed completion and the downturn in the market and the developer, Robertson Development, has only cut the prices by $2500 since first release nearly 17 months ago. Not the brightest of incentives. Its happening a lot across the board as well for non-conforming loans, or purchases above a $417k price. Buyers now have to come up with 10% down and have perfect credit…a rare find these days. Below $417k everything is pretty much the same…100% financing is still available and rates are back down to historic lows. Its going to be a difficult market this winter but as of yesterday, the Wash Business Journal mentioned that sub-prime lending will be gradually phased back in, allowing some more of us (myself included) to get back in the purchasing market.
actually, I’ve been over to The Beauregard to check out the units. they dropped the price on the primo penthouse by a whopping $150K from $1.35M to $1.2M. sounds like they might be willing to deal. there are 11 properties on MLS at that development and that’s out of a 45 unit building. somewhat telling, isn’t it?
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Readers should also note that unilaterally breaking a contract can lead to loss of their deposits. Worse, the developer can sue you for specific performance (i.e., forces you to buy it per the contract) and legal fees.