Lied to by developer...now what?

**Bulldoglvr** · 09-15-2008, 08:06 PM

Long story short: We bought a condo in a complex that was a "condo conversion," meaning they were apartments and some developer bought them and turned them into condos. In doing this, he covered up 30 year old boilers, covered up rotten wood stairs, and did nothing to mitigate mold. Now - the boilers are constantly breaking, people are falling through the stairs, and mold is growing in most of the buildings. Our HOA is broke from trying to repair these issues, and we're facing $275/month HOA fees that are only going to rise. If one of the boilers completely go out - there will be no heat or hot water (we have hot water baseboard heating). If there's no heat/hot water - our places are condemnable.

So basically we're screwed. After talking briefly with a lawyer we've found that going after the developer is useless, as he formed an LLC and there will be no money to collect. We could possibly go after the lender (Countrywide) for an inflated appraisal/inspection claim - but they'll throw a team of $1000 lawyers at us and it'll cost us at least $25,000 just to go to court.

So at this point, I know going after someone is not an option. I just want out of my mortgage, and away from this place. With the market what it is, and the fact that 30% of the units in this complex of 108 have already been foreclosed on - what do we do? We aren't in financial hardships, can easily afford this place, but considering the market and all the problems we face (of no fault of our own) we'll never be able to sell this thing for even half what we still owe (paid $165k 2.5 years ago, the same model across from us sold for $110 8 months ago).

Any thoughts? How the heck can I get out of this situation?

**jasgator5220** · 09-25-2008, 09:00 AM

The creation and sale of condominiums is dictated by state statutes. So your remedies will be a function of what is included in your condominum documents and purchase agreement and what was required to be in these documents by statute. You may also be protected by any number of consumer protection laws applicable to your state.

Some states, such as Florida, review these documents and some states, such as Pennsylvania, unfortunatly, do not. Regardless, your starting point should be a review of these documents, keeping a particular eye out for any representations and warranties made by the developer. As an example, conversions in Florida, require that certain warranties be given to purchasers, including a 3 year warranty as to the structure of the improvements (roof, walls, etc.) (note that in lieu of this warranty a developer may also establish a reserve to make any applicable repairs). Also, conversions in Florida require that certain inpections be performed, which such report will be attached as an exhibit to the condominium documents. If this is the case, you may have recourse against the inspection company. I'd also look to see what reserves, if any, were required to be kept by your association to pay for repairs and whether you association is still developer run or if turnover has occurred.

My mind is running, don't give up, take the time to read through these documents, you may find that the answer is there.

**Bulldoglvr** · 09-26-2008, 08:18 AM

Thanks for the response. I've gone over the HOA documents several times, with a fine tooth comb. There are no warrantee's or anything that promised all the problems were fixed. Our problem (which we feel stupid about now) is that there are numerous verbal promises made, but nothing in writing. Meaning - the realitor told us the boilers were new and that the place was totally redone. I know I know - get everything in writing. But our problem is that CountryWide told us they were paying for the appraisal AND inspection, so we thought we were covered. Come to find out - there was no inspection done. It's obvious now that I should have had my own inspection done - but when you get told similar promises by every party involved - I guess you trust them. Wont make that mistake again!

After talking with several lawyers - we dont have many options. Yes, we can sue the developer for these issues, but since he has since dissolved his LLC, there is nothing to collect. We could also go after his insurance company for neglegance - but it's clearly fraud and they dont cover fraud - so there's nothing there. The only other recourse we'd have is going after the lender for an inflated appraisal. First off, we most likely wouldn't win this. Second - it would cost more than we'd win.

As far as getting out of the mortgage - our options are foreclosure and bankruptcy.

I guess we'll wait it out...

**Greg** · 09-26-2008, 09:06 AM

I did not realize a developer could hide behind an LLC while committing fraud. Talk to another lawyer or 2. It might be possible to go after his personal assets.