From the March issue: As developers of struggling new condos grow more desperate for cash, some may be pilfering funds from their own projects, industry insiders say. The reserve fund — a sort of rainy day fund for capital improvements at condo conversions — is particularly vulnerable because developers have easy access to it, experts said. Former Sheffield57 developer Kent Swig and Rector Square’s Yair Levy are the most high-profile examples of sponsors who’ve been accused of depleting these funds. But attorneys and other sources say many more developers are likely misappropriating funds, using residents’ money to pay their bills and falsely inflating costs. [more]

From the October issue: When the buyer of a new development condo on the Upper West Side broke
his sales contract last spring, he didn’t regret forfeiting the
$250,000 deposit. By his estimate, the $2.5 million condo had lost far
more of its value — some $800,000 — since he agreed to purchase it. “He thought, ‘I’m losing less money walking away from my contract
deposit. I’m not going to throw good money after bad,’” said Steven
Sladkus, a partner at law firm Wolf Haldenstein Adler Freeman &
Herz, and the buyer’s attorney. So Sladkus was surprised to get a call from the buyer a few weeks ago
asking if the sponsor would sell him the unit after all — for the
right price.

Rolan Shnayder of Home Owners Mortgage, which has been lending in a number of new condo buildings that are less than half sold

From the October issue: New condos — the black sheep of the real estate industry for much of 2009 — are finally beginning to move again as construction progresses and developers find ways to circumvent stiff presale requirements for mortgages. For example, the Tempo condominium in Gramercy, which sat virtually buyerless for months after it went on sale in September 2008, sold 10 units this summer. In Lower Manhattan, District on Fulton Street sold 10 units in August alone. The Fairchild at 55 Vestry Street in Tribeca, which had sold only one unit in April and none in February or March, put five units in contract in August and even saw a bidding war, the developer said. “Deals are getting done at new developments,” said Stephen McArdle, the principal of brokerage Urban Marketing, which is handling sales at District. “We’re seeing activity. Six months ago you weren’t seeing anything. The fact that the bottleneck is open is very encouraging.”

Former Corcoran sales director suing for commissions from Five Franklin, the Avery and Linden78

A former sales director for Corcoran Sunshine Marketing Group says she
has been stiffed for more than a quarter million dollars in residential
brokerage commissions for sales in high-profile developments including
Five Franklin, the Avery and Linden78, a court filing says. Broker Nancy Reese accuses Corcoran Sunshine and other Corcoran
entities of withholding at least $200,000 in commissions on closed
sales and says the developer of Linden78 owes her $70,000 in
commissions on canceled contracts, the court papers say. The lawsuit was filed at a time when experts believe more contracts
will be canceled as the condominium market continues to deteriorate.
But real estate lawyers said most contracts between brokerages and
developers include clauses that state that commissions are not due
until the title is passed to the buyer, so brokers are generally not
paid when a contract is canceled, attorney Adam Leitman Bailey, who was
not involved in the case, said. [more]