DOWNTOWN LAS VEGAS:

Promises unkept? Condo buyers sue

Friday, Nov. 14, 2008 | 2 a.m.

Steve Marcus

Streamline Tower on Fremont Street downtown is facing a federal lawsuit from buyers who say the condo company sold them units that were smaller than advertised and made false promises regarding buyers’ ability to rent their units to short-term visitors.

Quiet on the northern front (6-11-2008)

Streamline Tower

As if the problems at Streamline Tower weren’t bad enough.

Since it opened May 1, the swank downtown condo has had trouble trying to sell its 275 units.

Now Streamline Tower is facing a federal lawsuit from 48 disgruntled buyers who claim the condos they purchased are significantly smaller than advertised, and that Streamline falsely promised that buyers could make money by placing their units in an “executive leasing program” to be rented out like hotel rooms.

The suit filed last month in U.S. District Court also claims Streamline and Executive Locations — a local leasing company also named as a defendant — violated federal racketeering laws.

The suit alleges the “fraudulent scheme” between the two companies was to “misrepresent the ability to operate Streamline as a hotel/condominium project and lease the condominium units” for a rate of $3,500 per month.

The buyers are asking for their deposits back, court-ordered protection of their money in the meantime, and damages in excess of $10,000.

In court papers, Streamline has denied any wrongdoing. The company argued in its Nov. 4 filing that the alleged falsifications “are completely refuted by the clear and unambiguous terms” of the purchase agreements.

According to Susan Allen, Streamline’s sales director, sales agents were never supposed to guarantee their ability to lease sold units. Since she began working there as sales director 15 months ago, no one has guaranteed the units could be leased for cash, Allen said.

She speculated that some buyers involved in the suit are trying to get out of their purchases because they’re having trouble in this economic climate obtaining financing to close on their units.

As of June, 57 percent of the units had been sold, and 27 of 275 units had closed.

The good news is the vast majority of owners are happy with their purchases and aren’t planning to “flip” the condos to try to make quick profits, Allen said. They’re long-term investors excited about downtown prospects, she said.

Executive Locations President/Broker Cherrell Tarantino also denied the plaintiffs’ claims. Executive Locations is a Las Vegas-based company that provides fully furnished, privately owned accommodations for business executives.

She told the Sun in an e-mail, “There are absolutely no grounds for our being named in this lawsuit at all. The case is against the developer ... Our company did not sell the units nor are we affiliated with Streamline Tower.”

The 48 plaintiffs — all but 15 of whom are California residents, according to the suit — claim their concerns about Streamline began early in the process.

When they entered purchase agreements, most of the plaintiffs thought the tower would be completed by December 2006. That was delayed a year, and another delay resulted when Streamline couldn’t obtain a certificate of occupancy for the units, according to the suit.

Although each buyer in the lawsuit has put down a deposit down ranging from $30,000 to $90,000, none has closed on a unit.

At least some of the plaintiffs claim to have purchased the Model A units, which they say they were told measured 996 square feet. But, according to the suit, they got 600-square-foot units.

Allen said drawings plaintiffs saw before buying — the building wasn’t yet constructed — contained square-footage estimates, not guarantees. Some buyers ended up with condos larger than promised, she said.

Another concern of the plaintiffs is the lack of retail tenants on the first floor. During a quick walk around the building Thursday, all retail spaces appeared to be empty.

In June, a broker working with Streamline, Liz Clare, said a market/deli was days away from signing an agreement for one space. Clare said this week the market has the lease agreement “in hand” and is poised to sign it.

To be sure, the story regarding downtown redevelopment is far from one-dimensional.

Neonopolis, the mall across Las Vegas Boulevard from Streamline, has experienced a significant resurgence of late. The Fremont East District just to the south of the tower likewise has been seeing several signs of business and civic growth.

The trick now, Las Vegas Mayor Oscar Goodman said at a recent news conference, is to find residents for downtown condos, many of which have been struggling, but none more so than Streamline Tower.

Discussion: 8 comments so far…

By johnevegas

11/14/08 at 4:31 a.m.

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Nothing more than mob mentality trying to use the courts as a way out of investments they're unhappy with. In the mean time, these companies are further burdened and substantially damaged by a bunch of sore losers. This is the "quick profit" crowd who bet wrong and have no patience.

I suppose there is the possibility that the plaintiffs might have also been in such a hurry to make money, that they did not have time to read the contracts they signed.

Satisfied customers bought condos. The plaintiffs bought investments.
By doubledown_deadender

11/14/08 at 8:29 a.m.

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Here is the arbitrator's solution:

Take the purchase price and divide by 996 sq ft...Then - take the per/ sq.ft price and multiply that by 600 sq. ft and give the buyer the option to close on the NEW adjusted - and more accurate price....(30% LESS) OR THE OPTION TO WALK AWAY WITH 100% REFUND!!!

Bait & switch is an unfair trade practice according to the US Government.
By SusanA

11/14/08 at 10:37 a.m.

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Streamline Tower has bent over backwards to address every single complaint of these buyers. Nobody wants them to be happy customers and purchase their residences more than we do. Unfortunately, buyers are having troubles getting the same financing terms as a few years ago when they signed their contracts (through no fault of their own) and they decided to sue to try to get some of their EMD back. But we have a contract: they promised to buy and Streamline promised to build. We kept our part of the deal, but they are having troubles keeping theirs.

Let me correct some facts from the article:

* It's a recorded fact that the smallest condo is 815 sqft which anyone can see for themselves. During presales and prior to groundbreaking, the floor plan draft shown to prospective buyers was estimated to be 796 sf. During construction, the actual measurement came in at 815 sqft. Streamline is happy to give a tour to anyone and show them the smallest residence or any residence.

* The "executive leasing program" was not promised to any buyers, but it's their condo. They can lease it out if they desire. Streamline places few restrictions on rentals (it is in the Entertainment District after all). Other Downtown high rises are virtually at capacity with renters who really want to live downtown.

* Streamline had the contractual right to claim all of the deposits from these buyers over 6 months ago. We have not done so because we have been working with them to try to help them close on their residence.

* The Streamline condos are impressive and very well-priced. The owners living in the tower now are happy. Anyone is welcome to take a tour. Simply contact the sales center.
By Directps

11/15/08 at 11:47 a.m.

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Since Ms. Allen is grossly misstating the truth, let me respond with some facts for those who are interested in what's really going on.

Saying that the Streamline "kept their part of the deal" is like saying a teacher did their job by telling the students where the desks were. If one was to reasonably assess the percentage of truths that were told to all the buyers, it is less than 10%. So you'll have to excuse the buyers for being upset, but being as dishonest and as disingenuous to the level that the Streamline has been is criminal to say the least. This little "blog" from Ms. Allen is just another perfect example. And now she's actually saying that she can't understand why the buyers are so angry?

Let's start with the "executive leasing program", which was ABSOLUTELY promised to all the buyers. To be very clear, the buyers were provided with excel spreadsheets from the "Executive" lease company showing the rental rates for nightly, weekly, and monthly rentals. The rates showed a "cash flow" position no matter what unit you purchased (strange, don't you think?) as well as an estimated 80% occupancy rate. Has anyone been downtown lately? Ironically, not only did the leasing company not have the correct permits to do nightly rentals, which essentially means your running the condos like a hotel, but they are currently being sued on their own for several counts both related and unrelated to the Streamline. I could go on for hours on just this portion alone, but let's continue with her next point.

Streamline's version of "working with" the buyers was a continuous shuffling of Lenders over the past year who were all UNABLE TO GET FINANCING. This includes big banks like WF to small banks that many of you probably never heard of. Many banks consider the Streamline unwarrantable. And let's be honest, since only 10% of the Streamline is actually sold, why do you think they were so "patient" with the buyers? It's pretty fair to say that they only worked with the buyers because they couldn't replace them with new buyers in this market. Even if they could, those buyers wouldn't be able to obtain financing either. Why not offer the buyers, who waited patiently while the Streamline ran almost a year behind schedule, the opportunity to purchase their units at the current market rate? What could that have hurt?

On a side note, just because you write a CROOKED contract, which is in direct conflict with every single verbal promise made by every single salesperson and manager who has been rotated through the Streamline Sales Office over the last 3 years, doesn't mean that ignoring your promises, your "word" as it were, is okay. Why not just say, "Look, we can't make this happen the way you were promised?" Easy... because if you say that, then you know the right thing to do is refund the buyers' deposits which were given almost solely under the auspices of the fraudulent representations and promises that you made.
By Directps

11/15/08 at 11:48 a.m.

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CONTINUED:

Doubledown_deadender's comments are correct. All the buyers should have been given an option to purchase at the new, correct market value (which they were not), and at a value that appraisers could justify and banks could loan on, or the buyers should have been given the opportunity to get a full refund. Instead, they forced the title company to release all the deposits even though the title company, a "neutral third party" (yeah, right), was fully aware that a lawsuit had already commenced. Does anyone else find that odd?

Of the less-than-30 people living in the Streamline, I've actually spoken to a few. They are not happy with what was promised (once again) would be in the building, nor are they satisfied with the overall look of their units. To be fair, the condos are neither impressive nor unimpressive... they're maybe middle-of-the-road. However, EVERY single piece of marketing material, and there's a lot, promised a LUXURY HIGH RISE in the heart of a completely renovated down town... are you kidding me? What exactly is luxury about the Streamline? The kiddie pool on the roof? The "unobstructed views" that were promised which have miraculously become obstructed?

Bottom line, Ms. Allen and the staff at the Streamline have had many opportunities to do the right thing. They didn't take those opportunities. Instead, they were motivated by greed (big shock) and by self-preservation. The response above truly sickens me, and it's only fair that someone actually set the record straight.
By mamabear0706

12/15/08 at 4:03 p.m.

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Since Streamline is so concerned with following the contract, maybe they should honor their commitment to pay real estate commissions per contract.
By bonniedog

12/26/08 at 3:54 p.m.

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Howdy,

I am from out-of-state but very familiar with the original developer of Streamline Tower, Barclays North of Everett/Lake Stevens, WA. Is Barclays being named in the federal lawsuit?

Bonniedog
By eazzy5

1/10/09 at 12:02 a.m.

Suggest removal

These guys are crooks!!! Everything about them is wrong and the writing was on the wall from the first time I met them. From the constant rotation of the sales team- regularly- to the strong arm tactics to influence a contract and then the forceful tactic to attempt closing... I'm a very unhappy buyer and I welcome the opportunity to be a party to any lawsuit. How do they expect to sell these hotel suites at at 50% more than they are now worth??? It's crazy. Sell at todays market value or give me my cash back!!!!

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