The Tokyo High Court on Wednesday upheld a lower court ruling rejecting compensation demands from purchasers of condominiums sold by the former Housing and Urban Development Corp., which later subjected unsold units to heavy discounts.
Some 1,200 people had filed the suit against the corporation, now known as Urban Development Corp., seeking a total of some 2.9 billion yen. They claimed the asset value of their units declined as a result of the discounts.
Presiding Judge Hiromu Emi said he understood the plaintiffs’ anger, given the dubious selling techniques deployed by the corporation, which held a lottery to make it appear as though there were many potential buyers.
He said, however, he could find no way to hold the corporation legally responsible for paying damages.
The plaintiffs had purchased condos in Tokyo and in Ibaraki, Chiba, Saitama and Kanagawa prefectures between 1993 and 1997.
They argued they suffered emotional distress after the value of their assets fell. The corporation slashed the prices of the unsold units by 10 percent to 30 percent — despite having previously vowed not to offer discounts.
But Emi agreed with the lower court, which ruled that the purchaser bears the risk of a fall in asset value.
But he said the corporation is obliged to shoulder maintenance and repair fees for the unsold units, although it is not required to inform residents of plans to slash prices.
The residents also argued that the area around the condominiums had turned into ghost towns because of the unsold units and that crime was on the rise.
But the court said these problems could only be solved by an increase in resident numbers, and that the residents could only urge the corporation to sell the remaining units swiftly.
Three similar suits have been brought before the courts, with the Tokyo and Fukuoka high courts having rejected the demands of purchasers.
The remaining lawsuit is a special case in which residents of a public housing condominium complex took issue with discounts offered on remaining units after the building was renovated.
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