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Rendering of The Tides

In a Twist, Developer in Mexico Returns Deposits

By Kevin Brass

Editor

After two years of acrimony and suspicion, the developer of The Tides in Playa del Carmen, Mexico, has returned more than $13 million in deposits to buyers.

“It’s been a long road,” said Adam Hebener, a Colorado banker who bought a penthouse in the oceanfront project.

The Kor Group also paid interest—8 percent for one year, 12 percent for the second year—to more than 100 clients who put down deposits. Most paid between $80,000 and $350,000 to hold units in the 209-unit development planned for downtown Playa del Carmen, the fast-growing town south of Cancun.

“None of it was easy,” said Tripp DuBois, v.p. of sales and marketing for The Kor Group. “But it has a happy ending.”

The resolution is a sharp contrast to the problems faced by buyers in other troubled projects around the world, including the much-publicized cancellation earlier this year of the Trump Ocean Resort Baja. At this point, buyers have apparently lost $32 million worth of deposits in the Baja California project, which had licensed the Trump name.

The Los Angeles-based Kor Group started selling apartments in The Tides in 2005, with condos priced between $450,000 and $2.5 million. Seventy-seven apartments ranging in size from 750 square feet to 3,000 square feet were sold, with buyers, primarily from North America, holding units with a 20 percent deposit.

The project stalled in 2008 when the project was unable to get environmental approval, in the wake of new laws protecting mangrove.

“There was no wiggle room,” DuBois said. “We just couldn’t make the project work for us.”

Angry owners organized into a cohesive group, dealing with Kor as one voice. “That was really the key to making the process work,” said Hebener, who sold several units in the project to friends. “As a group we felt like it was going to be an uphill process.”

Kor Group representatives said the deposit money had already been spent, which was legal under terms of the contract. Kor promised to pay back the deposits, but was unable to arrange financing, with the global economy grinding to a halt.

To convince buyers of their sincerity, Kor gave the group $140,000 to support their legal case and vowed to sell the property as soon as possible.

“We wanted them to feel protected,” DuBois said. “Instead of pointing fingers and going to court we said let’s get to work and sell this land.”

Two months ago Kor sold the property to a Mexico-based hotel developer. Dubois declined to name the sale price, except to say it was below the $30 million the company originally paid for the 8-acre parcel. In recent weeks the last of the buyers received their refunds.

“I know it was a blessing to get paid at all, so I’m delighted,” Hebener said.

But he cautioned that it took a concerted, organized effort and a detailed wording in the contract to protect owners.

“The real lesson is you have to do your homework,” he said. “And once you think you’ve done your homework, that’s where the real homework begins.”

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