South Florida Condo Speculators Filing Suits To Wiggle Out Of Purchase Contracts

In the Greater Fort Lauderdale area, the South Florida Sun Sentinel ran a story yesterday on the trend of real estate speculators who entered into contracts to purchase real estate in developments that were being constructed at the height of the real estate boom that are now looking to back out of the deals because the reversal in the real estate market is making it impossible for them to profitably flip their purchase contracts. Many are going to court seeking the court's blessing, as well as a court order directing the developer to return the contract deposits. Excerpts from the story:

• Brad Hunter, director of the South Florida region for Metrostudy, a housing market research firm, said more lawsuits are being filed because "there is a lot of buyer's remorse out there. Naturally people will be looking for ways to get out."

• About 40 percent to 60 percent of buyers are trying to wiggle out of their contracts, said Gary Poliakoff, a Fort Lauderdale attorney, referring to a dozen projects in South Florida that his firm represents, ... . "The claims and the suits are namely a means for an end for investor-buyers to get out of deals where they weren't able to realize the profits they expected, but it doesn't mean the reasons are legitimate," Poliakoff said. Developers are not budging, Poliakoff said, because they "built the buildings on the reliance that the buyers are ready, willing and able to close."

• John Mike, chairman of the Realtors Association of the Palm Beaches, said those most upset are buyers who had no intention of living in their properties. "A lot of those condos, unfortunately, were bought by speculators with the same business plans — to flip their properties, and unfortunately that has created a glut of units. Now we are seeing a large number of people trying to get their money back by hiring lawyers."

For more, see Housing slump has South Florida condo investors heading for the exits (Suits mount as condo investors seek money back) (if link expired, try here).

Go here for other stories on real estate speculators looking to back out of purchase contracts. zebra