Careful When You Buy an Unfinished New Construction Condo and Sell Your Old One, “I have no leverage.”

brookland

“Dear PoPville,

Last November, I saw a posting on your blog for new townhome style condos in Brookland being developed by Lock7. Shortly after, I took a trip to the Brooks Row construction site and visited Urban Pace’s sales office. By the end of the month, I had a ratified contract. One of the conditions was for my then-current condo to be under contract to be sold by Feb. 15th (this was later pushed back to March 30th).

At the time, I was told construction would be completed “late March/early April,” which was consistent with your blog post: “…scheduled to deliver early next spring.” The major snow storms we had pushed completion until “mid-May.” On April 17th, they hosted an open house for only one of the 22 units. That day, purchasers were still being told the project would be completed by “mid-May,” despite the fact that even the home that was “finished” was in reality very far off from being done. Two days later, my realtor told me he heard form Urban Pace and construction was then pushed back to “early June.”

On May 20, after weeks of privately expressing concerns about the construction progress with my realtor, I finally emailed Urban Pace looking for answers as to why every time I went to the site it appeared as though nothing was being accomplished. In that email, I explained to Urban Pace that I had to be out of my condo (it was under contract) by June 30. They then blamed the record amounts of rain we received as an excuse. Early that month, my realtor and I toured my unit. At that time the target for completion was “end of July/early August.”

On July 1, I moved into a temporary apartment with my dog (Lock7 is subsidizing less than a quarter of the rent costs). That weekend, frustrated with the move and the living situation, I sent another email to Urban Pace. On July 5, the response was, “With regards to construction Lock 7 told me today it would be complete end of the month, potentially early August. We need C of O after that, so settlements hopefully should take place in August once we have the final permits.”

On August 18, Lock7 sent a formal letter to the purchasers. In part, the letter states: “…the project is not as far along as we had hoped it would be by this date. At this point, it will not be possible to schedule walk-throughs until early next month. In addition, while we cannot commit to a firm date yet, we do not anticipate being able to settle units until at least the end of September. I would encourage you to secure housing through the month of September and until further notice.

“We feel terrible about these delays and we apologize for any issues they have caused you with planning and scheduling your move-in. While construction delays are common, we truly felt that we could meet the early summer delivery date. The general contractor had been showing us projections for completion that matched this timeline and we didn’t realize how far behind the progress was at the project until earlier this summer. We’ve been pushing ever since to do everything in our power to get this project to the finish line.”

At this point, based on their last letter, they will be at least five months behind schedule. From my perspective, either Lock7 and Urban Pace are incompetent, lying, or both. I have gone by the construction site on average of twice a week since the spring. Sometimes work is being done; sometimes it isn’t. I have raised alarms about this at every opportunity. I have asked for my emails to be forwarded to Lock7. I have given my business card to supervisors at the site asking for someone to call me. No one from Lock7 has ever contacted me. I do not believe a company that is waiting on the sizable profits from the sale of 22 half-million dollar homes would not be on top of the progress, especially considering how significantly delayed this project is.

I have no leverage. If I walk away, I risk the EMD and a home I have been excited about moving into for nearly a year in a neighborhood I want to live in. The only option I see now is to let others in the community know about this situation in hopes of raising awareness about these companies and how they have handled the situation and dealing with a customer.”

62 Comment

  • Sorry, but why do they care if you sold your old unit or not? Why should that be of concern for the new developer?

    • OP here – it was a condition for them to accept the contract on the new unit.

    • It was probably a requirement for financing, but as you note, that is something the lender would care about, not the developer, unless they are doing the lending.

    • It sounds like that was a condition of the contract — maybe the OP wouldn’t otherwise have the funds to qualify for the loan?
      .
      I too was a little puzzled by that one.

      • It was a condition for the buyer’s benefit, not the seller. An offer was made conditional on sale of the OP’s apartment.

  • EMD = earnest money deposit. (Took me a little while to figure that one out.)

  • Lawyer. Now. I’m surprised it took this long.

  • Get a lawyer, this is madness. They should be responsible for at least the bulk of your rental.

  • I totally understand that it’s frustrating, but I can’t imagine Lock7 would have any incentive to delay construction. What do you want to hear from Lock 7?

    • I can take this one…

      “We suck at our job and we apologize for the lack of updates and understand you are in trouble. We will take care of your rent until the building is completed. Also, here is a complementary bagel and coffee. Thanks for choosing Lock7. Unfortunately you chose poorly.”

  • I’ve been wondering what is going on here. There was a while that little to no work was happening…I thought they might have had financial issues. It took a reeeeeaaallly long time to get that wood siding on the building.

  • Just wanted to add my name to the list of people suggesting you call a lawyer. I don’t know what your contract with the developer looks like, but it’s very possible you could get some help.

  • it sucks and i definitely sympathize, but this is (unfortunately) pretty standard for new construction anywhere. they project a really optimistic schedule to get you in, but it is never going to be done by then. my MIL had her move-in date pushed back by a good 6 months. my brother’s was pushed back by almost 8.

  • I’m not surprised at all. There was a lot of questionable construction decisions throughout this entire process. I’m really curious to see how they keep water from permeating through the below grade windows. I’m a real estate agent and live in the neighborhood. I did not sell one unit – on purpose. These issues have little to nothing to do with the UrbanPace (they are actually the 2nd realtors on the project) and everything to do with the developer.

    • Not sure who you are, but your information is wrong. I live around the corner and Urban Pace has been selling this project since before it even came out of the ground.

      Dave

      • I don’t think your observation proves that Urban Pace wasn’t the first realtor to work on this project.

  • “we didn’t realize how far behind the progress was at the project” = “we know nothing about project management. It’s haaaard. :(“

  • Get a lawyer. I also find it odd that sale of your old condo was a condition of purchase. I wouldn’t be surprised if Lock 7 has cash flow problems and they need more evidence of receivables than a firm in a better cash flow position. They seem to have quite a number of projects going at any one time and, come to think of it, I can recall at least one in Shaw that seemed stalled for the longest time.

    • HaileUnlikely

      Sale of condo may well have been part of OP’s financing contingency. I sure as hell couldn’t get approved to buy another home while on the hook for my current mortgage payment and without and without the proceeds from selling it to use for a down payment.

  • What does your contract say in terms of delayed construction? When I purchased a new construction, my delivery date was delayed by almost 6 months. Sadly, I had no recourse because my purchase contract clearly stated that remedies could not be sought (like getting your EMD back, for example) until the delay exceeded 12 months. Unfortunately, when it comes to new construction, this sounds par for the course.

  • I don’t disagree that contacting a lawyer is worth a shot. However, I would be very surprised if the contract you signed did not contains all kinds of language limiting the builder’s liability for delays. For instance, unusual weather, material shortages, and labor strikes are common conditions cited as things for which the builder is not responsible. It may be that if you lawyer up, the builder will agree to return your EMD and let you out of the deal. They may figure they can resell your unit at a higher price in an escalating market. That may be an unsatisfactory remedy to you of course, and it will cost you some legal fees to get there. In short, I think you may be SOL in terms of a remedy that will make you whole. Sorry.

  • Does the contract tie the developer to a certain delivery date, or does it give them flexibility?
    .
    Given what you describe, if it were me, I’d be looking into getting a lawyer to see if there was any way of nullifying the contract and getting my earnest money back.

  • Does your contract have a “time is of the essence” clause? Those are meant to put a time frame on when the developer is required to deliver. I agree with the recommendations to get a lawyer.
    .
    Side note: I went to an open house for these units a couple of months ago. The sales rep told me that all of the units were finished, save for one final building that at that point consisted of only four metal beams stuck in the ground (I could see it out the window). She told me that building would be complete within three weeks. I seriously questioned that at the time, now I can see that she was flat out lying.

    • Not relevant to this situation, but re your statement that the sales rep was “flat out lying” to you…

      I visited a condo in the Rotonda, McLean (near Tysons) in 1993. Realtor told me that the Metro was expanding to Tysons. Right outside the Rotonda grounds, she airily waved. “Opening next year.”

      Don’t believe salespeople.

      • ChenChen

        also not relevant and even less helpful…

        when I was looking at condos at where I ended up buying, the seller agent said a number of things to sell the place up including “I’m thinking of buying a place here myself actually”

        I was really annoyed by that particular statement which I perceived to be a flat out lie until a month later, i walked into the building to find her in lobby in her jammies greeting me with “hi neighbor!”

        lol

  • I can only speak to Urban Pace as I dealt with them on my new condo recently and yeah, they suck. Granted I had a different developer, but my primary POC at Urban Pace was incompetent and wouldn’t give me realistic updates to the timeline. We closed 3 months later than anticipated because the building wasn’t finished, but we weren’t informed until the multiple projected finish times were already upon us that things were behind schedule. Wish I had more advice to help your situation!

  • Don’t bother with a lawyer, because almost certainly the lawyer fees will cost you far more than the rent you are paying (and that assumes you are successful from a legal standpoint, which I doubt). And I’m sorry to say this, but this is caveat emptor and a good lesson for everyone: never, ever, ever, ever, ever trust a contractor or builder when they provide a timeline. Never. As others have mentioned, there are way too many variables to trust the proposed completion dates, which is why they most likely are protected (legally) in the contract you signed. To put so much faith (i.e., selling your condo) in their proposed completion date is pure madness – there is no other way to put it. It sucks you had to do that to get a contract on a new place, but like I said this is a great lesson for everyone: Don’t sell your current dwelling for new construction (or a remodel, or whatever) if it isn’t complete. And you might want to stop holding your breath for a September move in – I would suggest trying to obtain a 6 month lease if it would lower your rent

    • Realtor here. You are correct that a lawyer is pointless. There is always a provision in the builder’s contract in case of delays. Check the language to see how much time they are allowed per the contract past the initial closing date. Even then, I’m not sure what you could do. Hopefully the OP made some money on the sale and the rent isn’t eating too far into his profit!

  • Many people are involves in a large construction process besides the developer: general contractors, subcontractors, architects and engineers, the city inpectors. Any of these members may have contributed to potential delays.

    Lock7 may not be directly responsible for this and have successfully developed multiple properties in DC so I am sure they are ready to work through this issue with you. What have you heard back from them?

  • No investor/developer wants construction delays as they don’t get paid until the project is completed. Seems like there’s more to this story as Lock 7 has a solid reputation.

  • Sorry for the OP’s experience but delays in new construction happen all the time for a million reasons. I live in a condo that Lock 7 developed a few years ago in Columbia Heights and I’ve had a great experience whenever I’ve had to deal with them. I think they are definitely one of the better builders in the city.

    • I also live in a Lock 7 building and can attest that they have been great to deal with. My entire experience working with them from contract to close was great and they have been attentive in getting anything fixed. I would guess these delays are more a reflection on the current real estate market as opposed to issues with Lock 7.

  • I’m sad you were under the impression the delivery would be on time. Any realtor who has represented a new construction deal in DC knows that construction is ALWAYS delayed. Most of the time, contractually, developers have 24 months to deliver the product, you did well to get them to subsidize any of your rent. I am not surprised at all with your account of events, I only wish your expectations would have been better managed by your realtor.

  • Are you a first time homebuyer? Because while I understand that you’re frustrated, you sound like you have no clue how real estate development works. Most projects, even by the best developers, are delivered past their expected date of completion. I can’t wrap my head around why you would sell your condo and put yourself in a situation where you would need a new construction unit completed by a specific date.

    • HaileUnlikely

      He is obviously not a first-time home buyer, as you are talking about his talking about selling his previous condo. However, it is a strong probability that it is his first time buying new construction. I would guess that a very large majority of current DC homeowners have never bought new construction.

      • Who peed in your Cheerios this morning?

        • Popville has become an outlet for the entitled DC elite to bitch about their “problems”. Wahhhhh my half million dollar condo isn’t being delivered exactly when I wanted it, etc.

      • As textdoc likes to say, it’s not an either/or. You and “Brian Johnson” are both correct!

      • HaileUnlikely

        I bought a house that was built before I was born. The mechanism by which that is supposed to give me insight into what to expect when buying a house that hasn’t even been built yet is what?

    • I am not a first time home buyer (if you read what I wrote). I was contractually obligated to sell my condo by a specific date. I understand there are delays with new construction. Before I placed my home on the market, I contacted Urban Pace more times than I care to count asking for updates and whether the completion deadline was still solid. Each and every time the response has been the same, “Still on track to meet [insert previously given date.]” The only time that narrative would change was when it was a mere weeks or days away from that deadline. Then they would pump it back by a month. And by that time, my old condo was already under contract.

      I have numerous emails to Urban Pace since May asking them to explain why for weeks at a time, several times over, no work was being done on the site. It’s one thing to miss a deadline by a month or two. It’s another to keep telling buyers something that is patently false and to be bare minimum 5 months behind schedule.

  • Let this be a lesson — when you are closer to settling, do NOT go to closing until everything on your punch list is completed. It gets much more difficult to get things fixed when your belongings are in the way. And it gets more expensive to have to take time off work to babysit the workers.
    So even when a closing date is set, leave some overlap time with your apartment so that you can keep some leverage by not closing until everything is fixed and complete to your satisfaction.

    • +1 on that. They’re motivated when they want to get their hands on your money. Once you’ve closed you have zero leverage. Just went through this.

  • Seems to me like buying an existing but recent home is almost always superior to buying new construction

    • Why is that? I’ve bought both. Pros and Cons to both. I don’t really see either one as being superior to the other.

  • 5 months really isn’t that long of a delay in construction. I know it sucks, but as others have said, you probably signed a contract that gave the developer lots of room for construction delays (as someone else mentioned, the typical is up to 24 months). So yes, you can talk to a lawyer, maybe he or she could send a letter to Lock7, which may get you something or it may not. Have you already contacted Lock7? You say you sent emails to Urban Pace and asked them to be sent to Lock7, but UP is just the broker and doesn’t have any real authority or owe you anything. Same goes for the workers onsite. Here’s Lock7’s website, which identifies the principals and includes email addresses for them: http://lock7.com/

  • Read your contract – it doesn’t matter if either Lock7 and Urban Pace are incompetent, lying, or both. What are the terms of the deal?
    The fact that Lock 7 paid part of your rent may indicate that they are liable – see how much after talking to your realtor and an attorney.

  • Standard. The only thing that sucks that is you somehow didn’t know this was standard – are you young? – in which case, I’d say, start reading the newspaper daily, you’ll learn a lot.
    .
    If you did know this is how it works, and somehow think they should be done when they said they would be, or make you whole somehow for the delay, well, I’d say like will be easier if you accept how things work in the world and not expect things to work differently for you.
    .
    I know enough about new construction to know that I’d never buy it unless I was prepared for – indeed, expected and planned for – very long delays.

    • -1. Your condescending tone of is unfortunately all too common on Popville comments. Construction delays are common, however the developer could have been more transparent about the delays to allow OP to plan their living situation accordingly.

  • I don’t think anyone here is confused about what goes into new construction. So let’s put aside the ‘welp, your expectations should have been better managed’ or ‘you have no idea how real estate development works.’ You’re probably not a doctor but if yours screws up or flat our lies to you I’m betting you won’t accept, ‘Eh, you don’t understand medicine’ as an excuse. Apparently that’s the standard for this industry. Aim higher. “I was lying to you but you should have expected it because I build or sell houses for a living,” isn’t exactly a great defense.

    It’s not just that there are delays. Delays happen. It’s that, from what the OP says, they set a new delivery date and they tell him they’ll hit it…right up the moment they do not. That’s just being dishonest and it doesn’t make me want to deal with Lock7 or Urban Pace. They clearly aren’t going to be straight with their customers.

    • +1
      Thank you. That’s exactly my point.

    • I’d suggest not coming to popville for an empathetic ear… i’m constantly entertained by reading through the responses of why every remote contingency should’ve been expected and thoroughly mitigated. It’s the internet, and everyone here is smarter than you.

  • I really think you have the legal option to get your EMD back free and clear given the delay and I’m sure you had a closing clause.

  • I also have purchased at Brooks Row and was under contract in February. While I wish the building was finished at this point the Urban Pace agent has kept us updated about delays and sent construction updates as the building has progressed. I knew buying new construction that there could be delays so I made arrangements with my current place.

  • Realtor speaking–I’ve had multiple buyers purchase from Lock7 and the process was great. Sounds like this one probably isn’t their fault. There’s a lot that goes into new construction and I doubt Lock7 is thrilled about these delays either as they don’t get paid until you move in.

  • I just want to say that I purchased new construction across from Costco and was only delayed 2 weeks (and this was coming out of the winter months so I was really expecting it to be longer). The builder was great at communicating any issues.

  • I’m in a very similar situation with a different developer – literally just six blocks away. They are currently four months behind (from the original promised closing date). The communication from the developer has ranged from unhelpful and non-committal to non-existent. The list of excuses has ranged from a delayed parking lot (while the unit was never close to being finished) to delays relating to Pepco service. My broker has been relentless in following up with them, but he can’t make them finish construction any faster.

    After four months of delays and having missed every single deadline, we move into a hotel this week. We extended as far as possible in our apartment, but can’t extend any further. The unit is 95% done with final inspections happening this week, so I’m hopeful that we’ll be in within two weeks. They are not paying for any portion of the hotel.

    Our contract allows them 24 months to finish, so also have no leverage. They could probably sell the unit for more today, so they probably wouldn’t fight me on getting my earnest money back. But I still need a place to live. And this is the place I chose and have been under contract for since March 1.

    My advice is to plan on a six month delay for new construction or sign a contract with financial penalties for missing dates. Negotiate that upfront or they are free to take their time. But given the DC market, they’ll just find some other buyer without the same demands for accountability.

  • The oldest trick in the book. They are happy to give your money back and raise these prices so they can raise the price to current market value. Towards the end of a project thay intentionally drag their feet hoping original buyers back out.

  • My wife and I purchased a unit there as well. We’ve been forced to stay in a tiny bedroom at her parents house in PG county (along with our dog) for over 4 months now. We keep being misled to believe that we’re only “a few weeks away”, but this is absurd. Feel free to reach out to vent to someone in a similar position. Also, who were you in contact with regarding rent assistance?

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