You just know this is happening all over America today - would-be homedebtors (and "investors") who signed up to buy that can't-lose condo in Phoenix or new home in Florida who now realize that values have plummeted, and if they close they'll lose everything.
So they go to their developer, politely ask to cancel their contract and for their money back, and their going-bankrupt developer says "no way Jose, you're buying this debt-trap from us no matter what!".
Oh, this is ending ugly.
As Market Cools, Home Buyers Seek a Way Out
In the latest fallout from the housing market's decline, disputes are breaking out between builders and buyers who signed contracts for new homes and condos when the market was hot -- and now want to get out of them.
Even as many of the new buildings are completed, buyers are filing lawsuits claiming they were duped into purchases they couldn't afford, or victimized through fraudulent investment schemes. Some are scrutinizing their contracts looking for loopholes, or searching out tiny flaws in finished homes that might allow them to back out without losing their deposits.
For some builders, the disputes are contributing to cancellation rates as high as 30% and writedowns in some markets. "People will go to great lengths to get out of a legally binding transaction," said Larry Sorsby, chief financial officer of Hovnanian Enterprises Inc. "They were willing to ride the real-estate boom on the way up, but some are not willing to ride it on the way down."
Florida, a magnet for housing speculators in the boom, is ground zero for such disputes. The state long has been a boon to housing attorneys, some of whom are now filing lawsuits against developers.
