Condo buyers claim hurry-up offer ‘coercive’
reprinted courtesy Maui News 12/7/08
By HARRY EAGAR Staff Writer
WAILUKU - Four local buyers who now say they were caught up in a "feeding frenzy" at Honua Kai in Kaanapali are suing to cancel their sales contracts.
Their attorney, Richard Rost, is also representing an unhappy buyer at the Ho'olei condominium in Wailea, but at Honua Kai he is presenting a different legal argument - one that, he says, could have implications for many real estate contracts.
The interest in Intrawest's Honua Kai condominiums in 2005 was intense. The developer limited real estate agents to three reservations each for the first phase of 242 units, which were to have opened about now. Construction continues, and the first phase is planned to open next month.
In December 2005, Michael and Judith Elam put down $132,000, and David Ward put down $196,000 for units. In June 2006, Barbara Duhamel put down $320,000 for hers.
Now they allege that they were rushed through "an assembly-line procedure" and were presented with sales documents to sign but no time to read them or to have them reviewed by a professional. Rost's suit says that this take-it-or-leave-it approach was intended "to prevent proper deliberation." It was "psychologically and practically coercive."
Later, the buyers discovered things in the sales agreements that dismayed them, but the provisions that Rost thinks will be fatal to Intrawest's ability to enforce the contracts required buyers to give up several legal remedies, including the right to go to court.
Intrawest and its associated companies did not give up any of those rights for themselves, however.
Rost said a decision last year by the Hawaii Supreme Court declared that such lopsided contracts are unacceptable as a matter of public policy and that they will not be recognized as valid.
That lawsuit involved the sale of a hotel, not condos, but Rost said, "I read it to mean . . . we won't allow those contracts to be recognized. I may be 100 percent wrong, but I don't think so."
If Rost is right, he said, the court will accept his argument for summary judgment based on the lack of a contract, without having to get to any other issues. There are several of those.
Rost alleges Intrawest and its sales arm did not comply with federal regulations in offering real property.
When his clients did read the fine print, they were upset to learn that if they put their units into a rental pool, but did not give management to an Intrawest associated company, their guests would not have common-area privileges at the 700-unit resort at Keka'a (North Beach).
The suit seeks an injunction and either punitive or treble damages.
The defendants are Maui Beach Resort limited partnership, Northwest Maui Corp., Intrawest ULC and Playground Destinations Properties Inc. A spokesman at Intrawest's North American resort development headquarters in Colorado said the company has a policy of not commenting on matters being litigated.
Harry Eagar can be reached at heagar@mauinews.com.
reprinted courtesy Maui News 12/7/08
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