As successful as Gary Barnett has been of late, his Extell Development has not been without its unenviable problems. First, there was those onerous brokers who refused to give back their advances on unsold apartments. Now, there are the tenants giving Barnett a taste of his own medicine, demanding their money back on one of his Riverside South condos.
For the past year, Extell and its Riverside Partner the Carlyle Group have been fighting a group of 41 buyers over the right to cancel their purchases and have their deposits returned, a matter that could cost the developers $16 million. Extell chalks it all up to a clerical error, as the contracts were supposed to list September 1, 2009 as the date of first closing, not September 1, 2008. Buyers were allowed to rescind their purchases if closings had not begun by the established date. Closings began in February 2009, so that last digit could make a big difference.
Extell already lost a suit at the federal level and is now pursuing one with the state courts, something the condo buyers consider onerous.
The underlying issue remains timing. Were the market still booming, few buyers would be eager to back out of these deals. Delays were common at numerous boom-time projects, but the number and success of buyer back-outs varied. These days, though, with buyer’s remorse running rampant in the land, it’s not hard to figure that these plaintiffs are trying to abandon what are, in some cases, now overpriced deals.
Given that Barnett has stuck it to brokers who fell victim to the recession when the deals they promised did not materialize, it seems only fair he should suffer at least a little as well. Clarical error or no clarical error.