voiceofsandiego.org: Survival... Vantage Pointe Developers Drop a Bombshell

As Vantage Pointe's clock ticked down on its big deadlines this weekend, the developers of downtown's biggest condo building delivered this shocker to the inboxes of the nearly 300 buyers late this afternoon:

In an e-mail, Brian Stoddard, president and chief operating officer at Pointe of View, informed the buyers that they would soon receive formal cancellations of their contracts and that their deposits will be returned.

More than 70 of the buyers were scheduled to close escrow this weekend, 42 months after their initial contract to buy a unit. Another 125 or so were slated to close later this month.

That means if the developers hadn't finished those units by the deadlines, they could've been forced to refund those buyers' deposits. But the refund announced today includes all of the buyers, even those whose deadlines weren't until later this year or next year.

The refund comes as good news for many buyers who'd been anxiously eyeing their closing dates and reconsidering their decisions in 2004 and 2005 to purchase units in the building. In recent weeks, the face-off between the developers and the buyers -- many of whom hoped for discounts and other assurances from the builder -- was getting increasingly ugly. Some said that disintegrating relationship had more to do with their reticence to go through with their purchase than the declining real estate market.

The buyers put down a 5 percent deposit when they committed to buying condos in the still under-construction project. For many of the buyers, those deposits are in the range of $15,000 to $25,000.

As reasons for the refund, Stoddard cited the "current economic environment" and the requirements imposed by Fannie Mae before the giant mortgage company would back mortgages for buyers in the building.

Those requirements include splitting the project up into three phases, and so the developers will be amending their plans with the state Department of Real Estate. Those amendments constitute a change to the project, a trigger for the contract to be voided.

Stoddard promised incentives to the buyers who would re-purchase their units when they're re-released. From the e-mail:

"In any event, that's good news," he said. "I'm glad that they're refunding the deposits -- now they can start from scratch."

Willis said he would still consider buying a unit in the restructured building, depending on how it was offered.

"You'd have to be a fool not to look at what they offer in terms of incentives," he said. "Some people may well consider moving forward."

I caught Randy Klapstein, Pointe of View CEO, on the phone just now. He said the process should take three to four weeks to restructure the building and release it for sale.

"Three to four weeks from now we'll hopefully have many of our buyers back," Klapstein said. "Hopefully it's positive and people will realize the value of the project."

Willis said the quality of communication from the developer has been very poor for the last few months. He said he hoped the restructured project would spark some better communication between the developers and whoever decides to buy a condo there.

"Hopefully they see, it's not just the fault of the real estate market," he said. "Hopefully now they can make some adjustments."

For a recap of all of our coverage of this project, check out this compendium.

-- KELLY BENNETT

This was the right thing for the developer to do, and I hope in the end they profit from it. While it was no fault of the developer that the RE market collapsed and loan options dried up, some of the decisions made in the development of this property, in the end, made it impossible for any buyer to obtain financing. Communication could have been much better to avoid the hard feelings, but in the end I say bravo to POV for doing the right thing. This building will be a value to the right buyers at the right price.

Posted by Randy | reply to this comment
May 7, 2009 9:20 pm

POV had no choice but to return the deposits. The buyers do not have money in hand yet.

Posted by DEBBIE | reply to this comment
June 2, 2009 3:35 pm

I'm not sure the project is out of the woods yet. These are some of the terms that FANNIE will require: 1. 75% of all units be owner occupied or secondary homes. 2. 100% of improvements to common areas be complete. 3. 90% of control given to unit owners. The reason Fannie is requesting the project be broken up into 3 phases is so that each phase can have (at least temporarily) Its own HOA. That will meet the above criteria if owners of all existing contracts can be moved into its phase 1. That's the first challenge. The second might be a design and engineering challenge whereby each phase in a normal subdivision has to be as close as possible to running 100% independently of other phases. Any common utility such as elevator, sprinkler system main utility panels, etc... might need to be redesigned to serve each phase exclusively.

Posted by Said E. Dawlabani | reply to this comment
May 8, 2009 11:16 am

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Vantage Pointe Developers Drop a Bombshell

Published: Thursday, May 7, 2009 7:56 PM PDT

-- KELLY BENNETT