Angst towers over some buyers
Several are trying to regain deposits amid a bankruptcy filing.
By Emily Nipps, Times Staff Writer
Published February 29, 2008
When the Towers of Channelside luxury condo developers filed for bankruptcy last month, they mostly blamed the 168 buyers who put down 10 percent deposits but never followed through with the sales.
Two-thirds of the buyers walked away from their deposits, ranging from $30,000 to $100,000.
Some, it appeared, couldn't get financing for condos that cost about $275,000 and up; others were shy about closing in a shaky housing market, developers said in court documents.
Several buyers, however, have come forward with another side of the story, one of broken promises and slow construction. A few have filed lawsuits;others are in a war of letters with the developers, hoping to get their deposits back.
John Madiedo, who owns a local insurance company, put down $74,000 on two units one for him, one for his son and hoped to move in by late 2007. But as construction went on and the developers seemed antsy to finalize the sales, "things just didn't smell right and sound right," he said.
"This was a house of cards," Madiedo said, "and when they started pressuring people to close, that's when scares started happening."
Scott Newberger also is trying to get his deposit, $50,400, refunded. "People didn't just decide not to close," he said. "We went there and looked at the building and we were like, 'Hell, no.' "
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At the peak of the real estate boom, Towers of Channelside looked like a fantastic investment, if not a chic place to live. The elegant drawings of the 29-story twin towers and floor plans of the 257 units were enough to sell all the condos before the project broke ground.
"I was very excited," said Newberger, a 44-year-old Tampa banker.
But after putting down his 10 percent and signing a contract in 2004, a series of events soured his taste for the project.
In March 2005, he received a new contract that was amended to extend the construction time from two years to three, though the amendments were not clearly highlighted, he said.
The sales office kept sending paperwork and notices to an old address, he said, despite several calls and e-mails informing the office that he had moved. Newberger suspected they were doing it on purpose to keep him uninformed.
Then, in August 2007, the sales office sent him a letter to set up a preclosing walk-through, but then rescheduled because the unit wasn't ready, he said.
In September, he did the walk-through and found unfinished drywall in the lobby, a concrete pit where the pool was supposed to be, and problems with the elevator and common areas, he said. He sent a certified letter saying he wasn't ready to close but says he never heard back.
Newberger began getting letters that said he would be in default of the sales contract if he didn't close quickly because he had already done the walk-through.
In the meantime, he kept writing the sales associate and developers to find out where his $54,400 was being held in escrow. He wanted to make sure the money had not been released to the developers because he was disputing the contract.
Newberger eventually learned the money was with U.S. Bank. He remained frustrated, though, because he said a manager there wouldn't give him details about his escrow.
Then, on Jan. 25, Towers of Channelside LLC filed for bankruptcy protection, claiming $50-million to $100-million in debt, $58-million of which is owed to the lender, Wachovia Corp.
Developer Michael McGuinness said he could not comment on Towers of Channelside. His partners, Brad Hite and Rich Sacchi, could not be reached. The sales associate, Becky Lane, said she no longer works for Towers of Channelside and could not comment because of the bankruptcy case.
The Towers' bankruptcy filing has stalled nine lawsuits filed against the project in the past year.
Two were filed by attorney Brett Wadsworth, who represents Peter Hoobyar, Nicola Hoobyar and Clarence Rowland, buyers who never closed. He plans to go forward with the cases once the automatic stay, or protection against debtors, is lifted in bankruptcy court.
The lawsuits include accusations ranging from misrepresentation and fraud to breach of contract, Wadsworth said. He contends that the condo developers violated the Interstate Land Sales Full Disclosure Act, which protects property buyers from being misled.
His clients are upset because their units were issued certificates of occupancy by the city, although construction was ongoing inside the Towers buildings. According to their contracts, once the certificates were issued, the buyers were obligated to close on the condos.
"There are certain procedures a developer must follow if there are a certain number of units. ... And it is our position that the C.O. should not have been filed without sufficient completion of the building's construction," Wadsworth said.
Bob Bass, the city's chief construction inspector, said certificates of occupancy can be issued for condo units even though construction and landscaping are ongoing.
Some buyers, though, say the incomplete work was enough to make the building unsafe.
Newberger thinks he has found enough evidence to force the developers to give back his deposit without a lawsuit.
Madiedo said he doesn't want to pour more money into getting back his $74,000, but also doesn't want to give up without a fight and may eventually sue the Towers.
The cases could take months, or even years, to resolve.
A lawyer told Madiedo the case would cost $25,000 or more to pursue. He is just grateful that he didn't spend more than $700,000 on two condos that could be mired in construction delays and court battles.
"This project," Madiedo said, "is a blemish on the business landscape in this community."
Emily Nipps can be reached at firstname.lastname@example.org or (813) 226-3431.