The initiation of lawsuits has clearly begun another wave of disappointment and anger towards the Vue. While the blog has been rooting for the Vue to be a success, the reality has now set in that this will be virtually impossible while buyers are being sued to move into a property they obviously wanted no part of. All future closings until these suits are settled will have the feel of buyers having to walk the plank.
Yesterday there were comments suggesting that the pre-sales buyers band together to defend ourselves rather than take the Vue on 1 on 1 if and when we are sued. I want to thank Jan, LA, and Holly for contributing them. This is an extremely delicate subject and is being looked at by several buyers and we’ll see where that goes. I expect there is enough interest in the subject to do a post on the pros, cons, and immense complexities of such an endeavor sometime next week.
Today I want to share with you an insightful note I received from one of the buyers who has been in regular contact with me and has had a big influence on my thinking.
I am not surprised that the Vue has taken the position to take legal action with pre-sale buyers that have decided not to close based on the arm’s length approach that they have chosen to take thus far. These buyers have committed significant capital to a 400+ Unit project that has had only 4-5 closings since September 2010. In my estimate, when pre-sale buyers review their options, closing on the unit appears to be the worst of the worst. The representatives of the VUE and its lenders have shown zero willingness in working with pre sale buyers to make these closings occur at a more rapid pace.
I expected by this point that the Vue and its lenders would have agreed to a loss sharing provision which would allow pre-sale buyers to close at today’s market value price, which would allow many more folks to be able to close. In exchange for this, pre sale
buyers would likely agree to equity sharing which allows the Vue Lenders to participate in the future appreciation of the unit once the pre sale buyer decides to sell the unit. If the unit sells for $50K more than the pre sale buyer paid, then the bank would receive $25k. This equity contribution along with the 10-15% deposit the pre sale buyers have previously made would likely come close to covering most of the original contract price of the unit.
Instead of using any form of financial creativity or having a steady stream of communication coming from the Vue and its staff, pre sale buyers are forced to deal with a figure that is less transparent than the Wizard of Oz who operates behind a big curtain. The big question is whether or not the Vue is pursuing pre sale buyers that have made no attempt to close versus those that have attempted to close and were declined by their lender (or both). If they are going after those that have made no attempt to close, then the Vue has made the decision that they will recover enough in assets to cover their legal fees. For those that have attempted to close, but have been declined by their lender, I would speculate that the Vue would have a difficult time convincing all 12 members of a jury that they should be held liable especially given that the buyer has lost a significant deposit. Either way, lawsuits like these scare away potential buyers and will likely not fill up the units any faster.
The blog has been all about negotiation, compromise, and fairness. The above is one of the more articulate statements of a solution that should work for all parties. I can only plead with the Vue to work with us and remove these lawsuits and pursue a path that gives the building a chance to succeed.
Please share your thoughts in a comment or with email@example.com! Monday will be our next post.