Where Are Your Deposits?
I was reading the transcript of the plan confirmation hearing for Towers of Channelside and a disturbing reference to buyers’ deposits caught my attention. The following is a snippet from the hearing regarding the deposits:
“The problem is, none of us know where those funds are. It’s been alluded that perhaps Wachovia, perhaps U.S. Bank, perhaps McFarland Ferguson. Now, we learn that perhaps even the title company itself has some of these funds on deposit”.
Towers of Channelside is one of the bankrupt condo developments where there is a substantial amount of deposits in dispute, approximately $2 million. As stated in the Disclosure Statement, there were 11 lawsuits pending in state courts with respect to these disputed deposits. The reasons asserted by deposit holders ranged from arguments that construction was not completed within 2 years to assertions that there were “material modifications” under the purchase agreement. The developer stated that it made necessary HUD filings such that there was a 3-year completion period.
In fact, there was at least 1 case where a deposit holder filed a motion for reimbursement of his deposit and rescission of purchase agreement, and the motion was denied. In fact, the court ordered the deposit holder to remove his lawsuit against the developer in a Florida state court.
Stay tuned as we watch for more developments on this issue.
