258 Bway is BOM / why do bad things happen to good contracts?
trend, or series of unfortunateevents?
Within the last week or so I blogged about (a) aloft coming back to the market ten weeks after a contract had beensigned (ohdear / 808 Broadway #2J is back) and wondered if that indicated that a coop boardhad rejected a buyer and (b) a contract being signed for the secondtime at a loft at 258 Broadway (contracts(again) at 90 Prince + 258 Bway).
Justbefore leaving the office for the long weekend late yesterday, Inoticed that another contract fell apart at 258 Broadway — monthsafter the board had approved the purchase application. (Maybe itwas the full moon??)
#2A at 258Broadway is back on the market as of yesterday at thenew-and-improved price of $1.71mm, nearly six months after acontract was signed and four months after the inter-firm data showsthat the board approved the purchase application. What the heckhappened here?
Thisis a listing that started a year ago June at $1.925mm, changedfirms in December to PruDE (through Elise Ward) at $1.675mm. Lookedas though everything was cooked and cleaned when the board OK camethrough in late April.
Itseems hard to pin this collapse to the liquidity and mortgagevolatility of the last few weeks, as this should haveclosed under any reasonable scenario long before that stuff hit thefan.
Iwas willing to speculate that the one at 808 Broadway was a boardturn-down (because of the ten week interval between contract andBOM), but I see no clues about what happened with #2A at 258Broadway (since the Board approved the purchase).
some d’oh! ‘analysis’
WithBoard approval, the deal cratered because either the sellercouldn’t sell or the buyer couldn’t buy. With the unit back on themarket, it looks as though the seller can and will sell in thiscase.
why don’t buyers performcontracts?
Themost trendy answer these days is that the buyer’s lender wouldn’tlend on the terms that buyer anticipated. (To complicate thescenario, that decision by the lender might lead a Board that hadapproved to re-consider, and turn down if the lending terms changeddramatically.)
Sometimes bad things happen to good buyers. Oneof them dies or gets sick or loses a job or … (myimagination Is much more limited than the range of possibilities).Sometimes buyers simply change their minds (what were wethinking?? I could never livethere.)
Ispent time on the phone last week with the friend of a client whoneeded some advice. The friend’s outlook about her personalfinancial situation had changed between the time of contract andnow. The friend was no longer confident about future income andtherefore did not want to take on the obligation of the coopshe was being interviewed by the board for.That is a world of pain.
Wetalked about why Boards might turn down buyers they have agreed tointerview (rare, but it has been known to happen). We talked abouthow sellers typically react to buyers who get turned down byboards, particularly if sellers suspect that buyers tanked aninterview. We talked about how expensive lawyers can be. (Why thefriend was talking to me instead of to her own agent or lawyeris totally unclear, but I did not pry about that.)
the ten percent solution
Anybuyer who gets turned down by a board has a lot of money at risk –the typically 10% deposit sitting in escrow with the seller’scounsel since the contract was signed. If sellers get a whiff thata buyer intentionally forced a board turn down, many sellers willtry to keep the 10% deposit as liquidated damages for the buyer’sbreach of the contract.
Somesellers — and some lawyers — will simply play hardball in thissituation (whiff or no whiff) and seek to negotiate about howmuch of the buyer’s money they get to keep.
Itcan get ugly. Ugly (with lawyers) can be expensive.
Wewill see if that friend keeps me posted on whether she boughtthe coop or not.
oh yes, a lovely loft, withtrees
Meanwhile, back at #2A at 258 Broadway …. Thisspace is said to “1,300 sq ft” with “400 sq ft” of mezzanine space,with 11 huge windows across a corner, overlooking the tree tops ofCity Hall Park. Maintenance is $1,995/mo. It is now set up as a onebedroom, with that large mezzanine space offering flexibility foroccasional sleeping (probably). It may be a little like living in aforest, with the right angles overlooking the trees of City HallPark from the second floor.
Elise Ward’s listing leads with “ready to sell!”Six months after a contract that did not close, I am sure theseller is quite ready to sell.
Open House Sunday Sept 9[next week] 10 AM – 12
Open House Monday Sept 10 [nextweek] 5 – 6:30PM
©Sandy Mattingly 2007
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