The Related Companies must return a $510,000 deposit, plus interest, to the Greek shipping executive who bought at the 22-story Brompton condominium on the Upper East Side, a federal judge ruled yesterday in a decision that could have broad implications for developers and condo buyers in New York and nationwide.
The Brompton buyers, Vasilis Bacolitsas and his wife, Sofia Nikolaidou, had signed a contract in May 2008 for a $3.4 million three-bedroom unit and later decided to back out, making use of a 1968 federal law called the Interstate Land Sales Full Disclosure Act. The obscure law, originally intended to be applied to the sales of large plots of undeveloped land, requires contracts in large developments to be in a form that can be filed with the city register.
At the Brompton and most other new condominiums, lenders stipulate that buyers are only allowed to register their contracts after they’ve closed on the purchase because a recorded agreement would result in a lien against the property. The decision, therefore, said the buyers’ attorney, Adam Leitman Bailey, entitles “every buyer in a newly constructed condominium which has sold more than 100 units within the last three years to obtain a refund of their down payment.”
Lawyers for the sponsors said the decision could be a death sentence for existing and future new development in the city and intend to appeal. [NYT]