Developers sued over lost earnest money
Would-be condo buyers say loans were falsely prequalified
SEATTLE – Six people are suing a luxury condo development in Bellevue and JP Morgan Chase Bank, claiming they lost a total of nearly $175,000 in earnest money after they were falsely prequalified for loans.
One, Danil Kasimov, a limo driver who makes $20,000 a year, said he lost $75,000 he borrowed from a friend to make his earnest money payment on a $1.5 million condo at Bellevue Towers. Such payments are made by home buyers to show they’re serious about completing a transaction.
Jim Robinson, the plaintiffs’ attorney, says a 2005 state law allows property owners to keep earnest money without proving they were damaged, and means buyers who should never have been prequalified for loans are sure to lose their earnest money when they fail to qualify for an actual loan.
The Legislature has created a means for developers “to grab their earnest money, and that is shocking,” Robinson told the Seattle Times. “If you take that law and combine it with a lousy real-estate market, guess what happens? You’ve got developers running around trying to grab people’s earnest money.”
Kasimov, an Uzbek hot-dog vendor who came to the U.S. in 2000, said he was delighted when he was pre-approved to buy a 32nd-floor condo.
Financing 95 percent, the new home would have cost him more than $7,000 a month, including monthly dues. Bellevue Towers’ preferred lender is JP Morgan Chase, which had an office in the same space as the condo model.
“I normally wouldn’t think I could afford this,” Kasimov said. “But there was all this excitement.”
He says he was told there were only a few units left, and the real estate agent, knowing what Kasimov did for a living, said, “Let’s see if they’ll approve you.” He signed the contract with Chase. Buried in the middle, Robinson said, was language that allowed the lender to boost the required earnest money to 25 percent of the purchase price, even after accepting the 5 percent, or $75,000.
That’s what happened, and when Kasimov couldn’t come up with the extra cash, he forfeited what he had already paid, Robinson said.
The Chase broker could not be reached for comment, the Seattle Times reported, and her former supervisor declined to comment.
Bellevue Towers, a two-tower development, just held its grand opening, celebrating completion of its first 22 floors, of an eventual 42 and 43. The rest is scheduled to be completed by June. Of the 539 condos, 180 have been sold, the marketing department says. The units sell for from $500,000 to more than $9 million each.
Patrick Clark, a principal at Realty Trust, which markets the complex, said Thursday, “We have no interest in selling a home to somebody who isn’t qualified to purchase it.” He added that “it’s a very difficult market, and (buyers) will make any sort of argument they’d like to get money back, but the contract is the contract.”
The lawsuit was filed in King County Superior Court.