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The Way Out – Part Two: The Flip Side Of Freedom

puzzle-piecesThe flip side of the freedom that comes with buying condos is that it’s easier to get in and harder to get out. Complain all you want about those pesky co-op boards that can put you through the wringer before they approve you.  But if they don’t approve, they can reject you, which sometimes is exactly what you want.  Condo boards can’t reject you because they only have a right of first refusal to buy the apartment (see, Playing The Odds), which leaves you with fewer options to get out of a deal

In new construction condos, which remain the battlefront for lots of broken contracts, you start out with even more strikes against you because you’re not buying from an individual, but from a well-oiled sponsor machine, with legal and financial muscle. And the contract you sign generally reflects that lopsided balance of power, giving the seller lots of outs, and leaving you mostly with ins.

Often you’re buying an apartment that doesn’t yet exist, except on a piece of paper and in your mind’s eye, a situation that creates its own problems because perception and reality rarely mesh. I like to see what I’m getting.  That’s why I stopped buying cold cuts at Whole Foods. They display perfectly baked pristine turkey breasts in the glass case, only to dig deep into the fridge and pull out an unseen chunk when you order. Yes, I know cold cuts and condos aren’t the same thing, but you get the point

 Before the bubble burst, people were breaking down the doors buying unbuilt apartments by the bushel so they could flip them like a stack of blueberry pancakes while the ink was still wet on the contract. Since then lots of people want out, not in

 Will they get it?  Can you?

 oops_signWas There a Big Enough Screw Up? In order to be actionable the error has to be material, which is sort of like pornography, you know it when you see if, though no one can really define it, except to say it must be something significant which doesn’t add much. The problem is most every purchase agreement has a mouthful of a disclaimer that says the buyer can’t rely on anything anyone told him prior to signing the contract – not ads or estimates or warranties, you name it. He’s limited solely to the floor plan and description in the agreement (or offering plan) for an apartment that may not exist

That’s what a buyer of a penthouse addition to the Plaza, who had no access to the unit, found out when he tried to rescind, saying the completed penthouse didn’t comport with the model, or with the representations that sponsor had made about the size of the rooms, the height of the ceilings and the number of windows. None of that matters, the court said. The disclaimer is a complete defense so the sponsor gets to keep the deposit. 

Another Plaza penthouse buyer wanted out, complaining he’d been told the apartment he was buying (but couldn’t see) was a two bedroom with a view of Central Park, when it turned out to be a one bedroom without a view. It doesn’t matter what you were told because the floor plan showed only one bedroom, the court told him. But the view is a different story because that was something exclusively within the seller’s knowledge. Call it a split decision.

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