Some buyers in Granby Tower want money back

NORFOLK 

Almost two years ago, Maria Evans decided to trade her four-bedroom house near Mount Trashmore in Virginia Beach for a condo in downtown Norfolk.

“For me, it was the convenience of not having to cut the grass and worry about plumbing and security,” the retired accountant said. “I was very excited about moving because I wanted to downsize.”

Attracted by the abundance of nearby restaurants and a view of the Elizabeth River, she decided to buy a unit in Granby Tower. She eventually deposited 10 percent of the $499,000 purchase price, Evans recalled, and expected to take delivery of her 23rd-floor unit in June 2008.

With the foundation of the building still not in place and construction stalled for months, Evans wants her deposit back.

“I’m 65 years old,” she said. “Am I going to wait two or three more years? As the years creep up, it’s not that easy to move.”

One year after breaking ground for the $180 million project, Granby Tower’s developer faces a growing roster of buyers like Evans who are clamoring for their deposits. The developer, Marathon Development Group of Norfolk, notified buyers in mid-April that it would consider canceling their purchase agreements and providing refunds if it didn’t have financing for Granby Tower “in a reasonable time period.”

More recently, Evans and others said, they’ve received letters saying that Marathon would be willing to refund their deposits if it wasn’t able to line up financing within 60 days.

Buddy Gadams , Marathon’s president and chief executive officer, said in an interview last Friday that the project has attracted “well over a hundred buyers” but declined to discuss the recent letters. “We are certainly sensitive to the buyers’ concerns,” he said. However, “each individual contract is confidential.”

Gadams said Marathon has lined up a lender to finance Granby Tower’s construction and expects to wrap up the financing in 30 to 45 days, a suggestion that he has made repeatedly in the past. He declined to identify the lender.

These assurances no longer satisfy Peter Forti . The trader for a Norfolk marine-fuels company said he and his wife agreed to buy a unit in Granby Tower in April 2006 for delivery this July. Because of the project’s delays, Forti said, he asked Marathon to revise his contract and provide him with options, including one that would allow him to cancel the contract and recover his deposit. Marathon, he said, has not yet responded to his request.

Forti said he didn’t blame Gadams for the delays. Construction of Granby Tower would be well under way, he said, if the federal government hadn’t held up development three years ago by threatening to take the site for a court annex. Still, “people’s lives have been put on hold” because of the delays, said Forti, who said he has sought help from an attorney.

Marathon’s plan for the project calls for building more than 300 condo units, retail space, townhomes and a parking garage. In October, the company disclosed that it had binding contracts for $80 million of condo units.

So far, only one deposit-related dispute has ended up in court. In March, a husband and wife sued Marathon in Norfolk Circuit Court to cancel their agreement to buy two units for a total of $1.19 million and recover their $119,000 deposit. The couple, Jon and Jennifer Crockford of Norfolk, said the contract called for their 21st-floor units, which they planned to consolidate, to be available around October 2008. The suit, which described earlier requests to have Marathon return their deposit, was settled out of court in April, with settlement terms not disclosed. Last week, Gadams declined to comment on the case.

Other suits could be coming. That’s partly because Virginia’s Real Estate Board provides limited help to buyers of condo units. The Virginia Condominium Act allows buyers 10 days to change their minds after signing a contract and receiving a public offering statement from the developer. However, the act doesn’t address other types of deposit disputes, said Tom Perry, property registration administrator at the Virginia Real Estate Board in Richmond.

If a developer fails to deliver a condo unit within the specified amount of time, there may be a breach of contract. But developers routinely include language in their contracts that provide them with leeway, Perry said.

Adding to the pressure on Marathon is the likelihood that tighter credit standards may make it more difficult for some buyers of Granby Tower units to qualify for the financing they initially hoped to get. Compared with conditions two years ago, lenders today demand higher credit scores and bigger down payments from condo buyers, especially if they aren’t going to live in the units they are buying, said Michael Hamar , a Norfolk attorney who has handled deposit disputes at another downtown Norfolk condo project.

When announced four years ago, Granby Tower was described as an engine for continued downtown development. Marathon, however, encountered repeated problems finding the needed financing. When an agreement for financing fell through in September, construction came to a halt and has yet to resume. Beginning in December, contractors removed pile drivers, cranes and other equipment from the site.

Since then, contractors, subcontractors and suppliers have filed more than $20 million of mechanic’s liens against the project for services and materials they say they’ve provided.

Harry Taylor said that he still looks forward to moving into the 12th-floor unit that he contracted to buy and expected to be ready this July. But because of the repeated delays, his confidence in the project has ebbed, the Chesapeake retiree said. His greatest concern, Taylor said, is his liability for something with an uncertain future. If financing for Granby Tower were in place tomorrow, its completion would still be at least two years away, he estimated.

“How long do you want to live your life in limbo?” he asked.

 Tom Shean, (757) 446-2379, tom.shean@pilotonline.com