The courts have been kept quite busy since the real estate bubble burst. If you surf the web, it seems that everyone was predicting that the housing market crash. One of the things that people tend to forget is that there is no guarantee that any property you buy will go up in value.
Right now there is a condo developer being sued because the project failed. The developer, Terry Bean of Oregon bought an apartment complex with the intent of converting it into condos three years ago. At the time, he paid $35 million for it which would be right around the time the market peaked. Two Portland investors, Frank Dulcich and Richard Akerman claim that Mr. Bean held back critical evidence about the project and the state of the Las Vegas real estate market in early 2006.
Among other things, the plaintiffs argue, Bean never disclosed to them that the apartment complex they bought in early 2006 for $35 million had sold barely a year earlier for about half that much. Had the investors been warned of the escalating price tag, they would have realized they were buying into a real estate bubble, said Michael Esler, the Portland attorney representing investors.
It seems to me that since they were seasoned investors, they would have looked at the title report and saw what the property they were investing in had sold for. Some due diligence on their part would have went a long way.
Bean is claiming that they are looking to cover their losses by accusing him of wrongdoing, despite making money with him on previous deals. He has filed a counterclaims stating they are to blame for failing to provide additional funding for the project. The trial is projected to last about three weeks.
***UPDATE
Last week a confidential settlement was reached.
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