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Developer sues prospective buyers Developers sue prospective buyers
(about 2 hours later)
A property development firm is taking legal action against prospective buyers whom it claims signed contracts for apartments but failed to meet the deadline to complete the deal. Two property development firms are taking legal action against prospective buyers who booked new apartments at the height of the property boom.
PBN Property Limited's action centres on the Woodlands Manor development at Stockman's Way in south Belfast. PBN Property Limited and Big Picture Developments are suing clients for failing to complete sales at two separate developments in south Belfast.
Two cases are listed for review at the High Court. PBN's action centres on the Woodlands Manor development at Stockman's Way.
It is also understood the firm has initiated legal action against another 10 one-time potential buyers. Big Picture Developments has served writs against potential buyers at the luxury Ormeau Bakery development.
The developer alleges they breached contracts of sale by failing to complete on their purchases. Plummeting prices
According to the company's website over 95% of the properties in the apartment development were booked off plan. The developers say the clients involved signed contracts for apartments but failed to meet the deadline to complete the deal.
Since the peak of the housing boom in spring 2007 when work on many new homes began, property prices have plummeted by about 30%, making them worth much less than the original selling price. Since the peak of the housing boom in spring 2007, when work on many new homes began, property prices have plummeted by about 30%, making them worth much less than the original selling price.
Writs have also been served against buyers of luxury apartments at the Ormeau Bakery development in south Belfast. Many banks are now reluctant to agree mortgages for such properties, meaning some prospective buyers face losing large deposits and in some cases, being held liable for the total cost of the apartments as agreed at the height of the boom.
According to PBN's website, over 95% of the properties in the Woodlands Manor apartment development were booked off plan.
BBC NI business correspondent Kevin Magee said other developers are taking similar action or are planning to, but PBN was the furthest down the legal route.
"The contracts for the development in question were completed in August 2008 so it's taken about a year to get to this stage," he said.
Our correspondent added that a legal procedure known as "an order of specific performance" could come into play.
"That means the developers would be attempting to have the ownership of the apartment revert to them and they could sell it at today's market price.
"The person who had originally signed the contract for it then would be liable for the difference - that would mean they would be paying maybe £70,000 and have no asset to show for it."
Dr Robin Davidson booked an apartment at the Ormeau Bakery development back in 2007.
The Ormeau Bakery development has been completed recentlyThe Ormeau Bakery development has been completed recently
The company behind the scheme is Big Picture Developments. He said the apartments were finished in July, and within weeks Big Picture Developments had served writs on clients who had failed to complete sales.
One potential buyer, Dr Robin Davidson, said the legal action was a major shock for him. He described the move as a major shock and said it had left many potential buyers frightened.
"People are left in a very difficult position - they signed a pretty watertight contract two and a half years ago," he said. Dr Davidson said: " This is very difficult for buyers who simply cannot raise the money for a mortgage and who cannot make up the difference between the price they signed up for and the price the apartments are worth now.
"People are left in a very difficult position - they signed a pretty watertight contract two and a half years ago," he added.
"They were not to know what would subsequently happen and now find themselves in a position of great difficulty in getting a mortgage or not getting one at all.""They were not to know what would subsequently happen and now find themselves in a position of great difficulty in getting a mortgage or not getting one at all."
A spokesman for the Ormeau Bakery development said they had honoured their commitments and no further action would be taken if their contracted purchasers did the same.A spokesman for the Ormeau Bakery development said they had honoured their commitments and no further action would be taken if their contracted purchasers did the same.