Question

Neal Wadwhani should be enjoying downtown living in Tampa's Channel District. If not him, then the tenant who would be renting his studio unit at Grand Central at Kennedy condominiums. He had a written promise from the builder to "deliver to Purchaser a substantially completed residence . . . within seven hundred thirty (730) days (i.e. two years). . . ." The two-year mark was March 8, 2007. The developer has completed parts of the project, but Wadwhani is still waiting for his unit. "I've been calling for more than six months now. . . . I'm always given a different date, different projected closing date. . . . Finally, I got impatient," Wadwhani said.

Force Majeure

Wadwhani sent a letter to the developer requesting that his deposit of $21,294.96 be returned, citing the builder's promise in the contract. The developer refused, citing another portion of the contract: a force majeure clause. In basic terms, the clause excuses the developer from meeting that two-year promise under circumstances including "acts of God, inclement weather, strikes, lockouts, material shortages, lack of availability of utility services, fire, storm, vandalism or other causes beyond the control of (the developer)."

Hurricane Katrina was blamed for the delays. "I understand that caused a labor shortage and whatnot. But even then, two years have gone by now, and I think there's been ample time, and I think there are other reasons for the delays they're not disclosing to me," Wadwhani said. Attorney Daniel Musca, who represented the developer, declined to comment. But Joe Narkiewicz, executive director of the Tampa Bay Builders Association, an industry trade group, said force majeure reasons are valid. For example, "It can take upward of two years to get permits," Narkiewicz said. "When you're building a building from scratch out in the field, many things can happen, and there are so many unknowns." In some cases, prospective condo purchasers have sued for not completing projects within terms of the contract. Two buyers sued developers of Trump Tower Tampa this year. The suit is still in court. But what about the notion that a promise such as the two-year deadline could be misleading to consumers? Wadwhani said he is caught in a built-in loophole that protects the contractor and not the buyer. "I think it's unfair to the consumer and basically gives [the developer] an unlimited amount of time to hold on to my money," Wadwhani said.

Examine Fine Print

Force majeure clauses are common in building contracts, Narkiewicz said, and it's up to consumers to read all of the wording in contracts that protects both them and the developer.

"The consumer knows when they sign a contract there could be delays. The consumer should be aware of what the contract says, and abide by the contract," he said.

Narkiewicz has a suggestion that might "level the playing field" for consumers and builders. He recommended that consumers ask that the contract (and exchange of money) take effect when permits are obtained or construction starts.

Unfortunately, it's too late for Wadwhani to make that request. He also has advice for anyone who plans to buy real estate:

"I would read the contract even better and make sure there's no loopholes that can come back and haunt you later," he said.

As you read the article, consider the perspectives of both the developer and the purchaser. Based on the information provided in the article, answer the following questions:

• What important lesson did you take away from the article? How will this insight be valuable?
• Do you think the developer is acting in an ethical manner? Why or why not?

Answer 1

• The most important that we takeaway from the article is that the contract between the developer and the purchaser should be read properly and any loopholes in the contract should be clarified well in advance and there should be no confusion at all at the time of signing the contract. This insight would be valuable as any purchaser who is planning to buy a residence should not be cheated by the developer based on the delay in the handing over of the flat.
• Developer is not acting in an ethical manner as he has delayed the handing over by giving illogical reasons. The natural calamity , i.e. cyclone Katrina can be taken as an excuse for the delay but it should not be delayed for more than two years. Thus the developer is unnecessarily creating problems for the buyer and thus is not ethical.