Cosmopolitan is still wrestling with disgruntled condo buyers

By Liz Benston

Monday, Sept. 20, 2010 | 2 a.m.

The owners of the Cosmopolitan probably regret the mess they inherited when they foreclosed on the property in 2008. That is, the requirement that they deliver condo-hotel units to buyers dismayed by the prospect of closing escrow.

Buyers plunked down deposits five years ago, before the market crashed and condo-hotels became known as unprofitable investments for both developers and buyers.

Owner Deutsche Bank has recently submitted plans with Clark County to subdivide into “resort condominiums” roughly 300 hotel-condo units at the property. These represent units still under contract with holdouts who turned down settlements reached with the vast majority of condo-hotel buyers months ago. That’s when buyers with deposits on nearly 1,500 condo-hotel units received up to 74 percent of their deposit money in exchange for canceling their contracts.

Holdouts have recently been filing individual lawsuits alleging fraud in the development of the long-delayed resort, which has been redesigned under new ownership. They seek a full refund of their deposit money or resort information they say is critical to deciding whether to buy.

The Cosmopolitan’s rooms are effectively complete and it will be marketed as a resort hotel with the added perk of kitchenettes — amenities typical of condos.

Holdouts accuse the Cosmopolitan of deception, saying management doesn’t want the hassle of managing condos for owners. Management would prefer to settle with buyers for cents on the dollar, buyers say.

The resort says it’s holding up its end of the deal to deliver condos.

Holdouts received letters from the Cosmopolitan last month informing them that the resort will no longer voluntarily refund buyers’ deposits like it did in the past.

“Because you did not participate in any of the settlements offered to buyers, we assume that you wish to close on your unit, and we have taken and continue to take steps to complete and deliver your unit on that assumption,” letter sent to buyers last month reads.

“We have now reached a point in the process where we will no longer be able to make adjustments to the condo-hotel program, and need to begin making final preparations for unit closings,” it continues.

The resort is pressing buyers to close escrow on a project after having failed to inform them about its progress during construction, including how it has changed from the original plans, said Shahram Shayesteh, a lawyer representing Cosmopolitan buyers. Buyers have little confidence they can make an informed decision about whether to close escrow in a building that can no longer be called a condo-hotel project, he said.

The Strip resort isn’t flinching.

“The Cosmopolitan has nearly 300 condo-hotel units that remain under contract, which we are planning to deliver for closings starting in December,” the property said in a statement last month. “Closings are dependent upon whether the remaining buyers comply with the terms of their purchase contracts.”

The county must approve Cosmopolitan’s requested unit-designation change before the resort can finalize condo sales.

•••

After more than a year spent gathering support among fellow counter-revolutionaries at Wynn Las Vegas, a group of dealers has filed a petition with the National Labor Relations Board to give the Transport Workers Union the boot.

If consummated, the effort would mark the second time dealers have cut bait with the union. More than a decade ago, dealers at multiple casinos voted for representation by the Transport Workers Union but voted for decertification years later when labor contracts didn’t come to fruition. Some Wynn dealers had said this time around that they were committed to the union for the long haul because, unlike previous fights over lesser issues, their earnings are at stake.

Dealers in 2006 enlisted the union’s help in trying to roll back Steve Wynn’s controversial policy of sharing dealer tips with supervisors at Wynn Las Vegas. Dealers have appealed a July decision by the state labor commissioner that the policy is legal.

Some Wynn dealers say the union is an ineffective champion for their cause. A proposed labor contract drawn up by Wynn’s lawyers two years ago keeps the tip-sharing plan intact yet remains unsigned. The proposal also gives Wynn more latitude to fire dealers than typical union contracts, which require employers to show “just cause” for termination.

Union leaders say they are doing their best but Wynn has refused to budge on the tip issue. The proposed contract, which would freeze the percentage of the tip pool supervisors receive, is better than no contract at all, they say.

Dealers disgruntled with their union may not get satisfaction for months, if not a year or more, according to the National Labor Relations Board’s Las Vegas office.

At least 30 percent of Wynn dealers have signed a petition to decertify the union as their representative, which typically triggers a decertification election supervised by the NLRB. But the board is holding off pending the outcome of three NLRB charges against Wynn involving terminated dealers, as those actions might have influenced colleagues to petition to remove the union as their bargaining representative.