Judge R. Kelvin Castel of the U. S. District Court in Manhattan yesterday ordered the developer of an Upper East Side condominium building to return a $510,000 deposit plus interest to a Greek shipping executive and his wife, "in a sweeping decision that could expand the rights of condo buyers in New York," according to an article by Josh Barbanel in today's edition of The Wall Street Journal.

The case involves the 22-story Brompton, a new brick-and-limestone tower built by by the Related Cos. on the southeast corner of Third Avenue and 86th Street and designed by Robert A. M. Stern.

The article maintained that "the ruling could allow hundreds of condo buyers to get deposits back, something many of them would like to do given the decline in apartment values caused by the economic downturn. An appeal is expected." "Related has been tougher than most developers in rebuffing buyers' efforts to get their purchase deposits back or to negotiate deep discounts on their agreed-upon sales prices," the article said.

The case was the latest and broadest effort yet by the federal courts to take provisions of an obscure federal law - originally intended to prevent fraud in sales of large tracts of undeveloped land - and apply them to apartment deals in New York.

The suit was filed by Vasilis Bacolitsas and his wife, Sofia Nikolaidou, who in May 2008 signed a contract to pay $3.4 million for a three-bedroom unit in the building and subsequently sought to get out of the deal and get back their deposit.

The office of New York Attorney General Andrew Cuomo rejected a claim by the same buyers under state law for the return of the deposit, but the federal judge, the article said, "found that the standard sales contract given to the couple didn't meet the requirements of the Interstate Land Sales Full Disclosure Act, which was passed by Congress in 1968 to protect land buyers."

"Since the contract was similar to those used in new condominium developments across New York, lawyers for both developers and buyers said it could potentially wreak havoc with both existing projects and future developments. 'It throws into doubt every contract of sale of condos in New York in buildings of more than a hundred units,' says Adam Leitman Bailey, a real-estate lawyer who represented the buyers. Mark Walfish, a lawyer representing Related, said an appeal would be filed. 'We believe the decision was incorrect and would effectively give a rescission right to nearly every purchaser of a newly built condominium,'" the article said.

Judge Castel's decision turned on one of the provisions of the Full Disclosure Act which states that a legal description of property being sold must be in a form that can be recorded with county clerks. In his ruling, Judge Castel held that the contract that Mr. Bacolitsas and his wife signed was not in a form "acceptable for recording" with the city, because it did not include notarized signatures of both the buyers and the sellers. As a rule, condo contracts in New York are not notarized, and many contracts - including those at the Brompton - contain clauses stating that they cannot be recorded, the article said.

Stuart M. Saft, a lawyer at Dewey & LeBoeuf who is not involved in the case, said that lenders do not want buyers to have a claim on a development in the event of a foreclosure, adding that "It is going to be a huge problem going forward."