Two more buyers aim to scrap ‘Residences’ deals in Aspen
December 23, 2008
ASPEN ” Two more buyers at The Residences at The Little Nell filed lawsuits Friday to try to get out of their contracts.
The new complaints mean that a total of eight buyers with contracts for 10 fractional ownership interests in the luxury condominium project are trying to scuttle their deals and get their earnest money refunded. Six buyers filed a previous lawsuit that is pending.
The Residences at The Little Nell, known as RLN, is being developed at the base of Aspen Mountain. It is one of the most luxurious of the fractional-ownership projects to sprout up in Aspen and Snowmass Village this decade. It will be managed by the Aspen Skiing Co.’s acclaimed Little Nell Hotel.
The latest lawsuits were filed by PFW Inc., a Fort Worth, Texas, corporation, and Retreat Properties Inc., an Alaskan limited liability company, against The Residences at Little Nell Development LLC. Both new lawsuits were filed by the Aspen firm of Klein, Cote and Edwards.
Like the earlier lawsuit, the latest complaints allege that the developer didn’t meet contractual obligations. The developer’s representatives have repeatedly said they will not discuss the litigation.
The PFW lawsuit said the corporation’s president and sole shareholder, Ivan Jack Miller, entered a contract in December 2006 to purchase a one-eighth interest in a four-bedroom condo. He deposited $450,000 earnest money.
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PFW claimed, among several allegations, that the developers didn’t obtain a full certificate of occupancy in time to comply with the contract and that the developer failed to close on the purchase agreement as required by Dec. 31.
The city of Aspen’s issuance of a conditional certificate of occupancy (CO) for the luxury condos is at the heart of the controversy. The city’s building department issued the certificates on Sunday, Nov. 30, after a flurry of inspections on Thanksgiving weekend. The certificates deemed that the condos could be safely occupied and accessed. They didn’t allow use of areas like a roof-top pool and spa, courtyard spaces, patios or a restaurant and dining terrace. Those amenities aren’t complete yet. As a result, the project as a whole was “uninhabitable,” the PFW lawsuit claims.
The Texas corporation claims that the standard contract drawn up by the developer says that the entire project ” not just the condos ” must have a certificate of occupancy 30 days before the closing on Dec. 31.
In addition, PFW claimed the developer missed the required closing date. A closing notice was mailed by the developer Dec. 1 and received by PFW Dec. 3. The closing couldn’t occur until 30 days after the notice was “given,” which legally was the date it was received, the suit says. Therefore, closing cannot be until Jan. 2, which allegedly violates the contract.
RLN got into a bind almost immediately after breaking ground in 2005. Efforts to stabilize the lower slopes of Aspen Mountain, so that the foundation could be built, initially failed. “In short, the shoring wall had subsided: It was falling over and taking the neighboring homes with it,” the PFW lawsuit alleges.
Resulting construction delays forced RLN to miss a targeted opening in summer 2008 and race to get a conditional CO on Nov. 30.
PFW wants a judge to terminate its contract and order RLN to refund its earnest money.
The lawsuit by Retreat Properties presses many of the same points. It is seeking to terminate a contract on a three-bedroom condo and refund of $270,000 in earnest money.
RLN spokesman R.J. Gallagher previously said the development firm is working with several satisfied buyers to close their deals as soon as the buyers want after New Year’s Day. As of early December, closings were scheduled on 70 percent of the interests and more were being scheduled, he said.
RLN has eight fractional ownership interests in each of the 26 condos for a total of 208 interests. The interests in the 19 three-bedroom condos started at $1 million and peaked at $1.9 million. They are nearly sold out.
The seven four-bedroom condos ranged in price from $1.25 million to $3 million. They are sold out.
It’s uncertain what an interest would sell for now, in the depressed market. Another mystery is the motivation of the eight purchasers who want to terminate their contracts. It’s possible that real estate deals that looked good just a few months ago have lost their bloom.
The first owners will be able to stay in the RLN units in February. The restaurant and retail areas are scheduled to open later in the year. The building also includes eight luxury hotel rooms and eight employee housing units.