Vegas Buyers Sue Developers After Condo Projects Cancelled

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By Dan Ackman
From The Wall Street Journal Online

With housing price growth slowing, home sales declining and interest rates and inventories of unsold homes rising, one might think buyers would be itching to exit condominium contracts any way possible. But in Las Vegas, a hot spot of the housing boom that has only recently started to show signs of cooling, some buyers are suing to stay in.

In one lawsuit, would-be condo buyers are suing the developers of the Vegas Icon condominium project -- affiliates of the New York-based Related Companies -- which announced plans to build and then cancelled the project. In another, filed by the same group of lawyers and settled last week, the plaintiffs had entered into reservation agreements, which involved putting some money down, to buy units in a project called Vegas Grand, just off the Las Vegas Strip, at specified prices. But the developers, Del American, based in Altamonte Springs, Fla., cancelled the reservations.

The plaintiffs allege the Vegas Grand developers needed pre-sales to obtain financing for the 880-unit project. In late 2003, they sold so-called reservations and then sent the buyers letters congratulating them on their new home purchases and urging them to tell their friends to buy as well. In April 2004, say lawyers for the plaintiffs, the developers issued a press release announcing they had "sold" 740 units and that sales were continuing at a brisk pace.

 

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