CHARLOTTE, N.C. -- In a setback for the Vue uptown condo tower, a judge ruled this week that the developer can keep only a deposit from buyers who signed contracts but can't force them to close on their units.
The developer of the 51-story Vue, struggling to close on condos in a weakened market, has sued at least 10 buyers, claiming they breached their contract to buy units.
The luxury condo tower at Fifth and Pine streets has closed on only 16 of its more than 400 units, according to the Mecklenburg County Register of Deeds.
Units starting selling in 2005, and since then the uptown condo market has softened. Price have dropped about 30 percent from the peak, real-estate experts say.
MCL, the Vue's developer, has said it will appeal the ruling, which was made Wednesday by Mecklenburg County Superior Court Judge F. Lane Williamson.
"The VUE is disappointed with the ruling...," MCL president and CEO Dan McLean said in a statement. "We believe we have a strong position and hope the appellate court will review the case and we will prevail."
The Vue's condos started selling for just under $200,000 to more than $2 million. Buyers paid 10 percent of the contracted sales price as a deposit.
Some buyers have sued the project to get out of their contracts. One couple has claimed in federal court that the purchase agreement failed to include necessary details and that the Vue did not deliver a deed within an agreed upon timeframe.
On Wednesday, attorney Celie Richardson argued on behalf of Florida buyers who sued the Vue, saying they terminated their contract and that the Vue refused to honor the termination.
They want the court to declare the contract was validly terminated. The buyer also says the Vue made promises about the unit that weren't fulfilled.
The buyers have asked for their deposit back.
The Vue, in a counterclaim, wanted to compel the buyer to complete the purchase.
The ruling, that the Vue may only keep the deposit if a buyer breaches a contract, could be good news for other buyers who have been sued, said litigation attorney Keith Nichols with Horack Talley. The firm is representing a handful of Vue buyers who have been sued by the developer.
"We think it's an argument that we expect to be advanced by almost everybody in the same position," Nichols said, adding he couldn't comment further since the ruling hadn't yet been entered in the court system.
The ruling could also help assure buyers wanting to walk away that they may not be forced to cover the entire purchase price, said attorney Bob Turner, also with Horack Talley.
The $275 million Vue overcame fierce challenges when it became the only new luxury condo tower to survive the recession.
But signs of weakness have grown since mid-September, when it started closing sales inked more than four years ago.
Local real estate attorneys say they are seeing more sellers suing buyers for backing out of contracts.
The Vue has claimed defendants signed enforceable contracts and asked the courts to let it force the buyers to follow through with their purchase, according to court documents. The Vue has also asked for damages "arising from the defendants' failure to timely perform their obligations."
When real estate was hot, it was buyers who typically sued because sellers backed out thinking they could get a better offer, attorneys say. Now that the real estate market has slowed, developers may no longer be content with simply pocketing a failed buyer's deposit.
Some buyers at the Vue have worried about closing because their appraisals have come in below contracted sales prices. That reduces the loan amount they can get - if they can still get one - and requires a buyer provide more cash upfront.
More than half of Mecklenburg County's condos declined in value since the last property tax assessment in 2003, victims of vacancies, foreclosures and other troubles still plaguing the local real estate market, new county data show.
Staff researcher Maria David contributed