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  • Builder Sues Potential Tenants

    Originally posted by Wood TV 8 Grand Rapids
    River House sues potential tenants
    Forcing them to purchase property

    GRAND RAPIDS, Mich. (WOOD) - The owners of the tallest all-residential building in the state -- a building that towers 34 stories into the downtown Grand Rapids skyline -- is now suing people who say they can't afford to move in.

    Documents obtained by 24 Hour News 8 reveal 18 families we found so far who are being sued by River House Condominiums . There are believed to be more. River House attorney Curtis Rypma says they're reviewing "quite a few" additional cases for possible lawsuits.

    River House began filing the suits in January and February. Some people were served as recently as this week.

    River House is trying to prevent the potential buyers from backing out of agreements they signed in 2006, to purchase the condos. It's also seeking money damages. Nearly three years after signing the promissory contract, many of the families say they can't go through with the deal.

    River House is the sister tower to Bridgewater Place on the banks of the Grand River in downtown Grand Rapids. There are 207 luxury units, but only 52 are sold. There are many that were supposed to be closed on, but have not.

    River House's Curtis Rypma told 24 Hour News 8, "We consider these to be binding purchase agreements and the time to get out of them has already lapsed. We've had some discussions (with buyers) and are open to discussion, but we decided to move ahead (with legal action)."

    24 Hour News 8 spoke with a half dozen families who are being sued. They told us they can't go through with their purchases because they have either lost their jobs, moved out of state to get a new one, can't sell their own homes, and the condos they intended to buy are no longer worth the money they originally agreed to pay for them.

    Some told us their condos were priced between $200-$300,000 and that they forfeited their earnest deposit, which was 3 percent of the purchase price. They fear they could be on the hook for much more.

    One woman who's being sued, Sharon Sanders, said when she signed the purchase agreement to buy the River House Condo in 2006 she was pre-approved for a mortgage. She immediately put her Kentwood home up for sale. Two years later, it still hadn't sold but the value dropped so she took it off the market.

    Sanders told 24 Hour News 8 six months ago she became a reluctant retiree, feeling forced to take a buyout from General Motors after working there for 30 years. She added, her income has now declined by two thirds.

    Sanders said when River House pressured her to close on her condo in December she asked for an extension that cost several thousand dollars a month. She then put her condo up for sale but couldn't sell it.

    She said she went to three banks to get a mortgage but can't qualify. She lost her $10,000 earnest deposit on the condo, and on Tuesday was served notice of the lawsuit against her.

    Sanders told us the lawsuit frightens her. She is scared she could lose everything and become homeless.

    24 Hour News 8 obtained a letter written by a Grand Rapids lawyer who is contacting people who are being sued. The attorney is trying to get them to "band together and share some of the costs of researching, analyzing, and defending each case." In the letter, he advises each of them that they have only three or four weeks to respond to the court summons they all received.

    River House attorney Curtis Rypma told 24 Hour News 8 condos are being closed on and that there are several in line to be purchased. He added residents have been living in the building for a few months.
    Look I understand that the builder is worried and angry because he never would have broken ground on this project if he had so few Tenants lined up. But to sue people into buying something that they can't afford? Yeah great idea, now instead of broken agreements to New Condos, he'll have a building full of foreclosed Condos, THAT will help property values...

    I really do think that the Builder is entitled to fair payment, but you really can't force economic hardship like this on people. There may be a 'legal' reason, there is really no moral excuse for this, the building owner almost scrubbed this project once due to the failing market, and now that it's too late he is looking for a quick pay out.

    This is just wrong is so many levels...

    ~ Draken

  • #2
    Re: Builder Sues Potential Tenants

    I doubt the builder wins. People back out of promissory letters all the time. They loose all the earnest money and any other money that have put towards the purchase (fees, inspection costs etc.).

    The only way the builder has a chance is if he finds anybody was fraudulent.
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    • #3
      Re: Builder Sues Potential Tenants

      Originally posted by Wood TV 8 Grand Rapids
      River House sues for
      financial data

      Some 20 lawsuits filed

      GRAND RAPIDS, Mich. (WOOD) - Developer Bob Grooters says he wants everyone to walk away happy in the long run.

      In the meantime, his Bridgewater Condos LLC has filed some 20 lawsuits against people who signed up three years ago to live in the now-finished River House project .

      It's a 34-story residential structure next to the Grand River with a spectacular view that reaches to Lake Michigan in the high-end upper floors.

      But a lot has happened between the time people began signing contracts three years ago and now. The tanking economy, for one.

      People such as Sharon Sanders who says she was forced to retire from General Motors, can't sell her existing house or the condo and can't get financing because her income has declined by two thirds.

      "It's a tough situation of course," says Grooters. "We want to work with her. We want to help her get one of the units sold, either this one or her house."

      So why the lawsuits?

      It's mainly to provide a legal means of getting at hard financial information so the company can figure out who really can't afford to live up to the contracts they signed and who can.

      Filing a lawsuit allows them the privilege of "discovery," which means they can force people to come up with documentary proof.

      "We need to determine who can and cannot close based on what assets they have, what their income levels are, that type of thing," says Kristen Myers-Chatman, River House marketing director. "That's why the action for discovery has been filed."

      Grooters says he wants to work with people individually to solve their issues.
      Now it looks like damage control is in the works...


      • #4
        Re: Builder Sues Potential Tenants

        I don't know, seems to me they should be held liable for their agreements. I know these people are going to be in a bad spot, sure. Why should the builder be put in a bad spot? How pissed would be if someone had agreement with you to build something, then backs out after you spent a vast amount building it for them? They rolled the dice, it didn't work out, I believe you still have to pay the dealer for the roll you asked for.


        • #5
          Re: Builder Sues Potential Tenants

          I can somewhat relate/understand the builders/development companies worry.

          Why would these individuals sign up if they were not going to go through with it?

          Now I don't completely agree to the "suing" part, but i do understand, look at it from the builders/development companies view, the interest that was shown in the first place probably allowed them to finish raising the capital they needed for the project, but i also bet the persons who intended to purchase are liable in some respect, depending on the contract they signed.

          **that is why whenever you are thinking of renting/purchasing a home/apartment/condo etc, it is essential to have a lawyer or a real estate agent look over the contract/lease.**
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          • #6
            Re: Builder Sues Potential Tenants

            In theory, all the people who signed those contracts are really responsible for making those payments. In practice, most of them only broke the contracts because they are not actually capable of making the payments, and there's a limit to how much help you can get from a lawsuit in that case. Its a painful situation all the way around, and now the question is how to distribute that pain. But that's a complex question, hence the lawsuit.


            • #7
              Re: Builder Sues Potential Tenants

              As far as I understand. Earnest money is not a down payment and the seller does not automatically get to keep it if the buyer backs out.

              I'm surprised there was not a liquidated damages clause to limit liability for both side? I bet there is one, but the builders are pissed because prices have dropped and are trying to get more.


              • #8
                Re: Builder Sues Potential Tenants

                As far as contract law goes, those potential tenants will be responsible for making those payments. Assuming it is constructed properly and signed by both parties, a promissory note is a legally binding contract that will be treated as such in court. That being said, one would hope there would have been a bit of a human aspect to this story and that the builder would try to work something out with them instead of taking them to court, but hell, with the way the economy is now, everything is quite Darwinistic.


                • #9
                  Re: Builder Sues Potential Tenants

                  I hope that the discover to decide who can actually afford is truth. While there are some who probably can no longer afford the condo, I'm betting there are some who saw that the value of the condo is now less then they contracted for and tried to pull out solely for that reason. They should (if still able) have to go through with it. That's part of the risk. And people choosing to drop out like that forces the prices lower, compounding the problem.
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                  • #10
                    Re: Builder Sues Potential Tenants

                    Gee... Why doesn't the Government make a law to tax all income gained from these contracts at a rate of say 90%..that way the contractor will back down and tear up these legally binding contracts (which really don't mean anything anymore I guess) and then of course the folks who back this bill in DC just bought 30+ Stories of voters.. Nice...
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