Developer Faces Class Action, Lawyer Says, “Just Two Years Ago, People Were Waiting in Line”

Posted on July 14, 2007. Filed under: Insurance and Taxes, Nationwide Markets, Pre-Construction Contracts, Real Estate Marketing |

Under a purchase agreement, developers for the 337-unit Two Midtown Miami in the Wynwood neighborhood just north of downtown Miami agreed to “substantially complete construction” no later than two years after purchasers signed the contracts in May and June 2004.

Now a class action lawsuit been filed which contends units were not substantially completed within two years, as required in the contracts. According to this July 12, 2007 article by the Miami Herald, the developer’s law firm, Greenberg Traurig, responded with letters that said the two years is subject to legally defendable delays – in this case general construction delays in South Florida and materials and labor shortages.

An increasing number of buyers nationwide, many in South Florida and the Gulf Coast, are scrutinizing contracts to see if they can get out of deals as the residential market cools. Law firms are gearing up teams of attorneys to deal with the litigation.

“It is a growing problem that I expect will persist for at least the next three years,” said Jack McCabe, CEO of Deerfield Beach-based McCabe Research & Consulting. “It will be interesting to see if the courts will rule that delays in materials or shortages of labor rank like hurricanes as an act of God for developers who have run over their contractual two-year construction deadline.”

chlesinger said the current craze over canceling condo contracts is a byproduct of “a miscalculation of the Miami boom.” According to the suit, pre-construction units sold within 48 hours in May 2004. About 700 people were on a waiting list for units.

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