FORT MYERS, FL - The investors in barely started downtown Fort Myers condominium Cypress Club want their money back, saying builder BAP Newleaf LLC can't possibly finish the project by its December 2010 deadline. But the builder and its escrow agent, the law firm of Becker & Poliakoff, say in court papers the investors' demands are unjustified.
"This is another in the spate of cases in which purchasers of a pre-construction condominium unit, in the face of a down market, are seeking to avoid their responsibilities under their Condominium Sale and Purchase Agreement ('Agreement') and secure the return of their deposit," Becker & Poliakoff attorneys Allen Levine and Phillip Dube say in a Sept. 26, 2008, motion to dismiss the lawsuit by investors Hilton and Ila Weiner in a case in federal court.
Attorneys for the investors, however, say BAP and Becker & Poliakoff are acting in bad faith by not returning the deposits on a project that clearly never will be built.
"There's been no financing since the get-go" and the city permits to complete Cypress Club have expired and would have to be applied for again, said Richard Inglis, the Fort Myers-based attorney for investors Anthony Cassetta and Francis Ciano in another federal suit against BAP.
Cypress Club, at 2601 First St., is on the Caloosahatchee River between the Edison Bridge and the St. Tropez tower. In 2006, Cypress Club was selling a 1,000-square-foot apartment for about $550,000.
Howard Freidin, a Fort Myers-based attorney who's also filed lawsuits trying to get the escrow money back, said $25 million in deposits was put up by roughly 160 investors in Cypress Club - 20 percent of their total price. The first 10 percent is held in escrow until the project is finished, but the second 10 percent can be used for construction-related expenses.
It's that second 10 percent that's especially in contention, although both Freidin and Inglis say their clients should get all the money back now because it takes at least two years to build a high-rise condo so it's impossible for the project to be completed by the deadline.
The first 10 percent, at least, is still in escrow and presumably will be paid back to the investors after the December 2010 deadline arrives, Freidin said.
But the second 10 percent has been used to reimburse BAP's owners for work they did on the project and for the $1.5 million in municipal impact fees already paid.
Only $4.5 million has been spent in actual construction for footings sunk for the two towers, but Becker & Poliakoff "gave out more than $10 million" to BAP, Freidin said.
His suit names Becker & Poliakoff as a defendant because the law firm had a conflict in handing out the money when it knew the project was in trouble financially, Freidin said. "They should have stopped at that point."
Becker & Poliakoff marketing director Susan Green said Tuesday the law firm "prefers not to comment on pending litigation. The facts of the case will come out in court. We are confident of our client's position and believe the plaintiffs have been treated fairly under the law."
But Cypress Club itself seems unlikely to be built anytime soon, commercial real estate broker Ed Bonkowski said.
"I see no chance whatever of anything being started in the next five, almost 10 years" in the way of downtown high-rises, he said, because the construction costs would be more than the units could be sold for because there's a glut of high-rise units on the market.
Nor are the investors likely to get much for the land, which has a $10 million mortgage, Bonkowski said. "Land has no value whatever in the downtown," he said, until the inventory of existing condos is absorbed.
Source: News-Press.com