Two Florida condominium buyers are finding themselves locked into their contract, after a ruling by the state’s 4th District Court of Appeal that may impact other buyers of condos and condo-hotel units in the state. The Palm Beach Post reported that the court ruled that two investors who put down a $99,000 deposit on a $495,000 pre-construction condominium unit in the Marina Grande development in Riviera Beach, just north of Palm Beach, cannot get their deposit back.

The two buyers brought a lawsuit against Marina Grande Ltd., the developer of the project. They wanted to get out of the contract because the developer had raised the condo fees by some 36 percent. While there is a section of Florida law that protects condo buyers by allowing them to exit deals if the developer makes significant changes to a project, according to Palm Beach Post reporter Alexandra Clough, in this case the court found that the fee increase was tied in part to rising insurance costs from hurricanes, a factor that was “beyond a developer’s control” Not satisfied with the ruling, the plaintiff’s lawyer wants to see this case heard by the State Supreme Court.

This case may prove to impact buyers at other struggling condo projects in the state, including the hard hit condo-hotel market. Clough noted that the project’s attorney believes that “developers throughout the state will be using the case to hold buyers accountable to the pre-construction contracts they signed.”

It wasn’t so long ago that pre-construction buyers were lined up with deposit checks in hand, eager to spend big on real estate in market that was seeing rapid price escalation. As the market slowed, many buyers tried to get out of their contract through a lawsuit or simply by walking away from their deposit. Now developers are fighting back, landing in court and struggling to close on what can easily amount to tens of millions of dollars worth of real estate.

For buyers, the lesson is clear. In pre-construction projects know when you may, or may never, be able to get your deposit back. Read the developer’s clauses in the contract. In a turbulent real estate market, the wait and see approach may be the most prudent. Some developers are resorting to auctions to unload their unsold condominiums units, and those buyers are seeing prices some 30 percent less than the original asking price.