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Saturday, July 28, 2007

Greed and Stupidity

Back on April 4th I wrote about a story in the Key West Citizen regarding some Key West investors that sued the Realtor who sold them units in the Santa Maria Condominiums that were under construction. CLICK HERE to read that blog. The plaintiffs alleged that the Realtor misled them about their ability to flip the condos and make a profit once the units were completed. The market in Key West declined and the buyers were forced to either perform under the contract (close on their sales) or lose their substantial earnest money deposits.

Today's Key West Citizen reports the results of the lawsuit: Judge tosses condo lawsuit. CLICK HERE to read the article. According to The Citizen "The buyers also admitted in the lawsuit that they had not read their investment contracts, but had relied on their Realtors' claims."

The defendant Realtor's attorney stated "The written contract was very clear and unambiguous," said Ed Scales, one of the lawyers representing Santa Maria. "The judge held that we didn't do anything to prevent these folks from reading their contracts. He said it was 'entirely unreasonable' for people to plop down [that amount of money] as a deposit and not read the contract."

I specifically remember the time around Christmas in 2004. People were buying up everything in sight including blue sky condos under development. Four condo developments were in various stages of development and each enjoyed hearty pre-sales,including the Santa Maria Condominiums. Another property at the site of the old Holiday Inn was demolished for a new Ritz Carlton style condo-hotel project almost sold out in about 30 days time. Again, locals were buying the units.

I remember discussing this buying frenzy with fellow Realtors at the time stating that I didn't think the market could support that many new high end condos. And it didn't. Even if the market had not cooled off in Key West, the number of high end condos was just too great to absorb so quickly. So it is no surprise that "investors" who relied on their own greed and stupidity failed to consider that the might not be able to resell their condos at an inflated price.

When I have a buyer who is ready to do a deal I suggest that he/she/they do two things: (1) get a professional inspection of the property and (2)engage a local real estate attorney if there are any legal issues (title, zoning,etc.)that may affect the property. Had the "investors" in the Santa Maria Condos hired an attorney before the contracts were signed, the lawsuit probably would not have happened because the lawyer would probably warned them that they were risking a lot of money on something that might not occur.

CLICK HERE To find your own good property in Key West's mls database. And then call me for more information. 305-766-2642.

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Gary Thomas in a Nutshell

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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.