New Condo-tel Owners Have Change Of Heart

Aloha Kakou:

Decreasing property values and lower nightly rates have new condominium hotel buyers headed to court.

Condo-tel unit owners across the country are suing to get out of contracts which, they say, should have been treated as an investment in securities rather than as a real estate transaction.

The Securities and Exchange Commission (SEC) in 1973 specified that when developers made claims about rental income, marketed a rental program without prompting or placed any limitations on occupying units, the purchase could be considered a security. Reluctant buyers are saying that sales representatives of these new properties made verbal claims to these ends, even if the sales literature made no such comments.

http://online.wsj.com/article/SB124943301400306393.html