Deposit Holders vs Key Developers. Or is it KeyBank?
A group of deposit holders are currently seeking summary judgment against Key Developers (the original developer of the Place at Channelside). They are alleging materially adverse modifications to the condo circular and claiming a refund of their deposits. These deposits are held in escrow accounts, pending the dispute. In earlier court filings, Key Developer asserted that some of these purchasers “were speculators who chose not to close only after the market turned”.
If the deposits are found to be non-refundable, these monies would form part of the cash collateral of KeyBank. In that sense, it’s not really a tussle between the claimants and the developer; but more a tussle between them and the bank. After all, it was KeyBank which filed the Creditor Plan for Reorganization and essentially dictating the direction of the bankruptcy proceedings for this case.
In any case, what is more interesting in this case is an excerpt in the affidavits of the deposit claimants. Among the material adverse modifications asserted, they also allege:
“Massive increases in the Association’s Annual Operating Budget projections from:
$923,357.00/yr (Initial Projection) to: $1,582,896.00/yr (Revised Projection filed with Fla.DBPR during 2007) on the Annual Budget, and an increase from $424,180.00 to $2,478,756.00 on the Projected Cost of fixed, depreciable capital assets which must be replaced periodically, and therefore applicable and corresponding reserves to cover such anticipated costs, must necessarily be extracted from affected unit owners by the Association, in the form of monthly, annual, and/or specialized assessments.”
For those of you looking to buy condos in the Place at Channelside, do check your HOA dues carefully, and get a copy of the annual operating budget projections and do some stress-testing. Like any other condo purchase, HOA dues go up if the units are unsold or the unit owner gets hit by foreclosure.
Finally, let me leave you with a snippet from the Disclosure Statement filed into court last July:
“The Debtor [Key Developers] allegedly used its share of the proceeds [from a settlement with certain deposit holders] to pay legal fees, architectural and construction administration fees and delinquent amount to the HOA. KeyBank asserts the Debtor wrongfully used the funds as these funds were the cash collateral of KeyBank and KeyBank did not consent to their use”.
So KeyBank was saying that Key Developers wrongfully used the funds to pay money which the developer owed to the HOA…
