Dumont Condominium Deposit Refund

Q: I recently read about the Broadway Development company going bankrupt in downtown DC and now I see that the Dumont Condominium building is completely empty.  Is it lawful for a developer like Broadway to retain buyers deposits if they can’t perform and if its not lawful what if the developer can’t refund the deposit due to financial reasons?

Thank you,

Joshua S.

A:  The condominium laws of the District of Columbia typically require that deposits for sales of new condominium units be placed in a segregated escrow account which should remain available to contract purchasers so that, in the event that a contract purchaser validly terminates a purchase contract, the contract purchaser is entitled to and will, in fact, receive the return of his or her deposit. If a buyer were to establish valid grounds for a refund and the developer defaulted by refusing to return the deposit or in failing to maintain the segregated escrow account, there are criminal penalties. .It should be pointed out however, that some developers require contract purchasers to give the developer their deposit to be used to pay for the cost of the development. Getting a deposit back under these circumstances is much harder and may be impossible if the condo project fails before it is completed.

Mark G. Griffin Esq is a partner at a Washington, DC based firm Griffin & Murphy, LLP. Griffin & Murphy, LLP is a boutique law firm concentrating its practice in real estate law, civil litigation, development, condominium conversions, estate planning, probate, and business law. Attorneys in the firm practice in Washington, D.C., Maryland and Virginia. For more information visit WashLaw.com.

Readers may send questions to him at info@BuildingDC.com.