That's Me In The Corner, Losing My Deposit
While there have been a few tales of people voluntarily walking away from their down payments because their equity was already annihilated before it was time to close, there’s another side to the coin: Those people who are involuntarily losing their deposits because the declining market is causing banks to require buyers put up more…
While there have been a few tales of people voluntarily walking away from their down payments because their equity was already annihilated before it was time to close, there’s another side to the coin: Those people who are involuntarily losing their deposits because the declining market is causing banks to require buyers put up more than their original 10 percent. And in many cases, the buyers can’t come up with the extra cash so they are losing what they already put down. In these cases, the developer gets to keep the cash, but has to go out and try to resell the apartment at much lower prices. The poster children for this phenomenon are the Pham family, who scraped together every last penny they had to put down $93,199 on a two-bedroom condo in Hoboken in 2005; when it came time to finally close last fall the they found they were going to need to put up another $150,000 or so. It would take us another 15 years to save that money again, Ms. Pham said. End of story: The Phams remain in their old apartment and Toll Brothers keeps the dough. Another buyer had a slightly better ending: They were able to end up buying a smaller unit than the one they were originally in contract for from the same developer. Anyone know instances of this type of thing happening in Brooklyn?
Up in Smoke: The Deposit Vanishes [NY Times]
“He was unbelievably non-responsive and gave questionable (at best) advice in my opinion. ”
Exactly my experience. Now I will only go to attorney’s that other attorneys know personally and actually recommend.
ditto, that’s interesting. I’m only speaking based on my limited experience with one particular real estate attorney who was “representing” me. I ended up filing a compaint with the NY State Bar Association against him. He was unbelievably non-responsive and gave questionable (at best) advice in my opinion. Oh well, live and learn. At least I don’t think I suffered financially because of him; he just caused an unbelievable amount of frustration.
Biff – I am an attorney and I have no faith in the attorneys I have occasionally employed outside of the office apart from my very good immigration attorney.
Snark, that makes sense and is why I wasn’t personally overly worried about having a mortgage contingency in either of my last two purchases. I didn’t have financing concerns.
ditto, I don’t doubt it. Unfortunately, I have little faith in the agents and lawyers I have dealt with in NYC, including my own.
Well clearly some sellers were “allowing” mortgage contingencies, so it seems you might not have been dealing with a summa cum laude lawyer…
> “I bought a coop in 2004 with a board approval contingency but no mortgage contingency”
I assume though that you were able to close within a reasonable amount of time, say the amount of time that a pre-approved mortgage might still be good.
If you are buying into a building that is not even complete yet, doing the same sounds like painting yourself into a corner.
Again, my experience with respect to contingencies while looking to buy a few years ago and the time I bought before that in NYC is identical to mopar’s. I have no reason to doubt Snark and benson, but every agent and lawyer I spoke to back then said what mopar said above. Not saying it was impossible to add them in, but it didn’t seem to be the trend in my own experiences.
I bought a coop in 2004 with a board approval contingency but no mortgage contingency. I sold the same coop in 2008 with the same terms. I had two different lawyers each time, and they both told me that no seller would allow a mortgage contingency.
More recently, I almost signed a contract (but ultimately did not) for a two family house. It had a mortgage and PMI contingency. Same lawyer as in the 2008 sale, now saying mortgage contingencies are standard because it’s a buyer’s market.
If I were the sponsor/developer, I would offer people like those in this article a change to move in on a rent-to-own basis. You do not want an empty buildin or the bad pr and you are likley to rent it anyway. let them move in and apply the dp to purchasing down the road.