Toll Brothers, beset by customers walking away from agreements to buy new homes, said that one cancellation last month came from the daughter...
Toll Brothers, beset by customers walking away from agreements to buy new homes, said that one cancellation last month came from the daughter of co-founder and Vice Chairman Bruce Toll.
Wendy Topkis and her husband, Douglas, told the company last month that “they did not intend to make settlement” on a $2.5 million Florida condominium, according to a filing Friday with the U.S. Securities and Exchange Commission. Toll Brothers said the company “intends to pursue its rights” under the purchase agreement.
“They were thinking about moving to Florida, but they changed their mind,” Bruce Toll said in an interview Friday on his daughter and son-in-law’s decision. “She canceled it because she had another child” and the condominium would have been too small.
Toll Brothers, the nation’s largest builder of luxury homes, said this week 28 percent of customers canceled agreements in the fiscal quarter ended Jan. 31, down from a record 39 percent in the previous three months.
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Homebuilders have been hit with record cancellations as real-estate prices decline across the country.
“We are going to handle this like any other no-show,” Toll Brothers General Counsel Mark Kessler said. “We have our procedures here and we are pursuing them.”
Wendy Topkis lives with her family in Manhattan. She didn’t immediately return a voice-mail message left at her home. Topkis works part time as an attorney for her father’s commercial real-estate company, BET Investments.
Topkis, 33, entered into a contract to buy the Florida condominium two years ago, Bruce Toll said. According to the company’s proxy statement, immediate family members of Toll Brothers employees get discounts on homes bought from the company.
Toll Brothers has historically required customers to pay an upfront deposit equal to 7 percent of the price of a new home, according to the company’s most recent annual report. That would equal $172,765 for the Florida condominium purchased by Topkis.
Rising defaults on subprime home loans have prompted lenders to cut back on mortgage lending, further fueling the slump in home sales in states such as Florida, one of the hardest-hit markets.
The number of homes sold by Realtors in Florida fell 29 percent last year from 2006, while the median price for an existing single-family home in the state was $208,900 in December, down 13 percent from a year earlier, according to the Florida Association of Realtors in Orlando.
Toll Brothers said its cancellation rate in Florida was almost 61 percent during the fiscal year ended Oct. 31, 2007, up from 28 percent in fiscal 2006.
“In the luxury market, the cancellations are being driven by continued negative sentiment toward the real-estate market as well as difficulties in selling your existing home,” said Anna Torma, an analyst at Soleil Securities in New York. Toll Brothers’ top markets include West Palm Beach, Fla., Washington, D.C., and Las Vegas, Torma said.