Buyer Beware: Court Rules Against Investor Who Purchased $11 Million Fixer-Upper
A divided court ruled against investors who claimed lenders duped them into purchasing 123 rundown condos.
August 01, 2017 at 12:21 PM
9 minute read
A dispute over fraud claims in a bulk condominium sale amounted to a case of “buyer beware,” according to a divided appellate court, which sided with the seller.
The case pitted buyer Shadowbrook at Vero LLC against The Palms I of Vero Beach LLC, related company Transcapital Bank and representatives Leonard Zedeck and William Himes. It arose from Shadowbrook's purchase of the majority of units—123 out of 164—in a Vero Beach complex.
Shadowbrook assumed the nearly $11 million loan from the property's previous owner, then added a $700,000 credit line from Transcapital. Its principal, nightclub owner turned real estate investor John Naimi, signed for the loan on behalf of co-plaintiffs DJS Enterprises LLC and Palm Beach Group Investment Inc. Naimi provided a $1 million personal guaranty. His company, DJS, paid $8,500 for a property appraisal. The buyers would later claim the seller charged the fee but never performed any appraisal.
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