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Condo-Hotel Bubble Pops, Splatters Many
As more rooms go empty, buyers target developers
By Rob Quinn
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Posted Apr 5, 08 12:12 PM CDT
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(Newser)
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Condo-hotel rooms were a hot buy at the height of the housing boom, but marketing them as investments that would pay out every time they were occupied could come back to haunt developers, the Wall Street Journal reports. As business sours, buyers who find themselves making mortgage payments on empty rooms are suing to get refunds.
Developers loved the up-front financing the condo rooms provided, but if regulators can be shown proof they created unfulfilled expectations for room occupancy rates or income, they could have to cough up refunds. "All you have to do is find the developer's newspaper ads, and it could be a devastating blow," one lawyer said.