We reported earlier about the
trouble dozens of prospective buyers experienced at Extell’s Rushmore building
in the Riverside South development, and about how various authorities were
looking into the matter. Well, Attorney General Cuomo has now determined that the
buyers were right, Extell was wrong, and ordered Extell to do the right thing.
The head of Extell, Gary Barnett, was reported to have conceded defeat on the
subject – but just a few days later, his lawyers told the judge they planned to
appeal the ruling.
The issue for the 41 buyers
in question was the date by which units were supposed to begin closing,
September 1, 2008. After units did not start closing by that date, as
their contract stated, they asked Extell to honor the contract and return their
deposits. Extell simply refused! They claimed there was a “typo” in the
documents, and what they really meant was September 1, 2009.
According to the assistant AG, "Sponsor has offered no evidence that the parties mutually intended a different date. After extensive submissions before this office and careful deliberation, the attorney general has concluded that the alleged error is not chargeable to the purchaser."
“[Assistant AG] Polishook also noted that Extell failed to present a single document that demonstrates that Sept. 1, 2009 was the intended date.”
If the market had gone up,
would the 41 buyers tried to withdraw? I suspect not. On the other hand, these
people put down their money based on Extell’s commitment to deliver their units
by a given date, and when the date passes and the units aren’t delivered as
promised, the buyers have every right to demand their money back, regardless of
the reason. A deal’s a deal – they put down their money and Extell promised to
perform by a given date. When the date passes and Extell hasn’t performed, it’s
not real hard to figure out what the right thing to do, is it?
Apparently, it's hard for
Extell.
There are nearly 60 comments
on the article on the subject in the Real Deal, showing strong interest in the
subject. A couple of the comments point to the clear point of view taken by the
New York Times article on the subject, "N.Y. Backs Remorseful Buyers at Rushmore
Tower." The title basically says, “the buyers want to get out of their
obligation, and NY lets them.” What else could it have said? Well, for example:
“N.Y. Forces Extell to Honor its Contract.” It’s all about your point of view, and
Extell has a clear one: Extell first. Which point of view is echoed by the New York Times.
Where does Extell’s financial
backer, the Carlyle Group, stand with this? Their opinion matters, because they
are the majority owners of the legal entity doing the developing here. You
might think they would be embarrassed, but of course not:
"Our strong partnership with Extell has produced several remarkable buildings in Riverside South," said Andrew Chung, a principal at Carlyle. "The Rushmore in particular is unaffected by the recent attorney general's decision because we have quality, location and momentum.
They also have money. Will
their money enable them to get away with violating more long-standing
commitments in the Riverside Center development next door?
