These aren’t easy times for the condo hotel industry. While home prices are dropping and sales of new homes sank more than 26 percent last year, condo-hotel developers have their own host of worries: namely, getting their projects off the ground.

Even projects that were seemingly well on their way to opening doors have run into snafus. Last year we wrote about the Setai San Diego, the west coast outpost of the luxury South Beach, Fla. hotel that was to have more than 160 condo hotel units ranging in size from 400–2,700 sq. ft. The condos had asking prices of more than $400,000 to $3.8 million and were to featuring ten-foot ceilings and stone and teak bathrooms. Setai buyers would have use of a 5,000-square-foot hotel spa and a private cabana-lined pool deck.

This week the San Diego Union-Tribune reported that the Setai Group filed a lawsuit against the San Diego property developer, 5th Avenue Partners, alleging that the development “is being falsely promoted as a Setai property.” The lawsuit, according to the newspaper, says that the Setai Group was in talks with the developer to create this project but that a deal was never finalized. The hotel was to be a refurbishment of an existing hotel, the Diegan. The Tribune reported that some 85 units have been sold, but now eight to ten buyers are looking to get their deposits back.

Legal wrangling doesn’t seem all that uncommon in condo-hotel projects. In New York, the Trump SoHo condo hotel project faced a challenge from the local neighborhood community group, the Soho Alliance. The group called for the Department of Building to overturn the projects’ permit application because of zoning issues. The Soho Alliance contended that the development was a residential building (owners can use their units for up to 120 days a year) and not a hotel, and therefore violated local zoning restrictions which allowed only commercial-use buildings in the area. Last fall, the New York Times reported that a press conference at the development was picketed by opponents of the project who carried signs that read, “Dump the Trump” and “Don’t Comb Over Here.”

Several planned condo hotel developments in Florida have never made it off the drawing board, while others like the Place in Gainesville, simply faced some bad press recently. The owners of the project, aimed at University of Florida Gator fans, faced liens because contractors and subcontractors said they had not received payment.

Other hotel condominium projects have been cancelled or put on the back burner. Last year, the W Hotel Las Vegas condo hotel was canned and the Conrad Las Vegas, a condo hotel project that was also slated to have condominiums under the Waldorf-Astoria brand, was also shelved.

It certainly doesn’t help that some of the markets that have had the largest proliferation of condo hotel projects are now also facing the biggest dip in overall real estate prices. The S&P/Case-Shiller Home Price Indices, which track real estate prices of single family homes across twenty cities, dipped nearly 8 percent over the 12 months ending in November. Miami saw the biggest decline with a 15.1 percent price free-fall, while home prices in San Diego were down 13.4 percent and Las Vegas real estate was down 13.2 percent over the same time period.