In the continuing serial, As the Housing Market Downturns, the latest episode sees yet another Northern Virginia condo buyer try to bail on his contract.
When last we left our unhappy buyers, one group that bought condos in 2005 at purchase prices of a half-million and up got a break in Ahn v. Merrifield Town Ctr. LP (VLW 008-3-489), when Alexandria U.S. District Judge T.S. Ellis said the buyers could seek rescission under the Interstate Land Sales Full Disclosure Act (ILSA), a statute that imposes certain registration and disclosure statements.
But the same developer prevailed in another suit before Judge Gerald Bruce Lee, who said in Barley v. Merrifield Town Ctr. LP,(VLW 008-3-434), that the same federal statute did not apply because the development had less than 100 units.
In our Nov. 18 installment, the 4th U.S. Circuit Court of Appeals held in Ndeh v. Midtown Alexandria LLC, that a contract that gave the buyer in a different development either the option to rescind for return of the down payment “or” the option to wait until construction was completed to proceed with the purchase, did not eliminate the buyer’s right to specific performance under Virginia law.
Ndeh signed his contract in 2005 with a purchase price of nearly $500,000. In 2007, he wrote to revoke his assent to the contract and asked for return of his $50,000 deposit. He sued the developer, alleging violations of the ILSA. The developer claimed the statute’s exemption for a dwelling completed within two years of the contract.
The parties argued over whether the contract obligated Midtown to build the condo project within two years. Ndeh argued that the contract language allowing him to rescind “or” to wait for completion of construction meant that he had waived his right to specific performance. Judge Leonie Brinkema ruled for the developer.
The 4th Circuit affirmed that decision in its Nov. 14 unpublished opinion. The panel said the Supreme Court of Virginia had not addressed the precise either/or contract language at issue in Ndeh. But the right to specific performance remained intact, the court held, because the contract did not include any clear language of exclusivity and Virginia courts regard specific performance as the “preferred remedy in real estate contracts.”
By Deborah Elkins