There is some speculation as to what happens next at the Vue in forums around the internet, and I like to float questions and participate in some of them to try to draw out some insightful feedback. I actually don’t know what the protocol is for cutting and pasting forum conversations here. I’ll just hope that no one that wrote them minds that I do. Below is one example.
Question that was asked:
Assuming the developer does eventually capitulate and finally drops their price demands to market, what happens to the 8-10 people who have already closed on units? Is
there any recourse for them to get refunded the difference between what they
paid and what the unit pricing will drop to. Seems unfair for these people
since they actually did honor their contracts.
Answer, which came from “Smelly Cat”:
None. I could literally show you hundreds of examples all over the country where this
exact situation has played itself out…a small group or even as much as a 30-40% of old contracts close and then when the bank and developer are mostly certain that their efforts to cajole or in some cases threaten (with specific performance litigation if contract provides for it) early buyers will no longer bear fruit, they capitulate to the market (what else can they do ?) and prices collapse. All the early buyers can do is hope that 5-10 years down the road they can recover their original investment. Also, it appear that this lawsuit may have settled the issue of forcing buyers to close, but I have never seen a lender try to enforce those kinds of provisions once the developer is forced out and the lender assumes control of the project. Too much bad publicity I guess for too little chance of recovering much anyway. By the time they foreclose they generally have written things down sufficiently to just unload it to a bulk buyer (like Vue Orlando) or in some cases they’ll simply hire a firm to retail the units on their behalf but at discounts steep enough to ensure that they start generating significant enough sales velocity to get it liquidated in 9-15 months.
A reader reminded me the other day we may be way too presumptuous to assume that the Vue will be foreclosed on and has no other options. I actually hope that is the case. Maybe we will learn something in the coming days and weeks that will change the sales dynamic. After all, we all made substantial deposits and have no assets to show for them. So in truth, there are no winners here. Maybe with some flexibility and creativity we can all salvage something from this transaction, the pre-sales buyers and the Vue.
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