With the economy still shaky, many potential home buyers are sitting on the fence, especially when it comes to so-called "common-interest" communities like master-planned communities, condominiums and mixed-use developments. Would-be buyers are worried that they won't be able to cancel a contract if prices of similar unsold units fall, or that they'll buy a home in a failing development.
We talked to Roger Winston, a real estate attorney at Ballard Spahr Andrews and Ingersoll who specializes in common-interest law, at his office in Bethesda, Md. Here are excerpts from the conversation:
The Wall Street Journal: Many people are walking away from deposits that they've made on new condos or homes, because prices fell while their place was being built. How much of that are you seeing?
Mr. Winston: I have been seeing a lot of contract defaults. People who put down $50,000 on a $750,000 unit see that they could buy the same place now for $600,000. The money that they could lose by going through with the deal is greater than the deposit, so they walk away. Morally, they shouldn't, but from an economic standpoint, they may be better off.