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Real estate company sued over 2 land deals

A REAL estate company has been sued over two land transactions.

Shangrui Investment Development Co. Ltd. filed the lawsuit against American CM Real Estate Development Co., and its agent Yu Xue Mei, for breach of contract, fraud and unjust enrichment pertaining to two separate properties:

1) A Capital Hill property described as Lot No. 026 E 01, and listing Sen. Paul A. Manglona as the fee-simple owner — the property is the subject of pending litigation in Superior Court; and,

2) A Tanapag property described as Lot No. 014 B 43 owned by Villalora Condotel Residence LLC.

Shangrui, through attorney Tiberius Mocanu, filed the complaint in Superior Court.

The complaint states that American CM is in the business of buying and selling property in the CNMI. American CM approaches potential sellers and offers them a set amount of money for their property. If the seller agrees, it then enters into an agreement to lease/assign to the seller. The closing date is usually scheduled around 180 days from the signing of the agreement.

American CM then searches for a buyer for the same property.

According to Mocanu, American CM presents itself to buyers both as a seller and a broker.

But the lawsuit alleges that American CM does not act in its clients’ interests. “The company tells buyers that it is not safe to purchase property directly from local sellers because there are many legal problems associated with Saipan properties that must be resolved before a property can be purchased.” American CM “offers to purchase a given property directly from the seller, fix the problems, and then sell it again to the buyer for a fee.”

Mocanu said the fee is a significant markup of the original purchase price. “American CM makes this secret profit (fee) while acting as a potential buyer’s agent,” he added.

Capital Hill property

On April 27, 2017 American CM entered into an agreement to lease from Sen. Paul A. Manglona, “the fee simple owner,” a property located on Capital Hill described as Lot No. 026 E 01.

The lease agreement contemplated the purchase of the property for $418,100, with a closing date on or before Oct. 27, 2017.

According to the lawsuit, American CM, through Yu Xue Mei, entered into an assignment of ground lease with Shang Rui Development for the purchase of the same property for $522, 625.

Mocanu said on April 28, 2017, Shangrui paid American CM $100,000 as a deposit for the purchase of the Capital Hill property.

The lawsuit stated that American CM purported to assign all of its rights and interests in a nonexistent lease to the Capital Hill property to Shangrui. The defendant represented that it had good title to the property. “In fact American CM did not have title to the Capital Hill property,” the lawsuit stated.

It added that as of Oct. 27, 207 and to the present, American CM had not delivered to Shangrui the title for the Capital Hill property.

Tanapag property

On May 31, 2017, American CM entered into an agreement to assign a lease with Shangrui for property located in Tanapag, Lot No. 014 B 43, for $1.69 million.

On June 19, 2017, 20 days after entering into an agreement with Shangrui, American CM entered into an agreement to assign a lease with the owner of the Tanapag property, Villora Condotel Residence LLC, in the amount of $1.525 million.

Mocanu said American CM did not have any interest in the Tanapag property when it entered into an agreement with Shangrui.

Shangrui paid American CM a total of $660,000 as a deposit for the purchase of the Tanapag property which was scheduled to close on Nov, 27, 2017.

But on that day, no closing occurred on the deal. American CM failed to deliver a satisfactory and legally sufficient assignment of lease to Shangrui, the lawsuit states.

It added that Shangrui requested the return of its $660,000 deposit, but American CM has not returned the deposit.

Mocanu is asking the court to find that American CM breached its contract with both properties, and was unjustly enriched by retaining deposits totaling $760,000.

The lawyer also asked the court to find that American CM fraudulently induced Shangrui to enter into contracts by falsely misrepresenting facts in an effort to cheat Shangrui.

The plaintiff is likewise asking the court to hold a bench trial to adjudicate the complaint, and to award damages to be proven at trial.

Source: Marianas Variety : http://www.mvariety.com/cnmi/cnmi-news/local/101617-real-estate-company-sued-over-2-land-deals

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