Enrique Arevalo bought what he was told would be a luxury two-bedroom apartment in one of Miami’s newest condominiums, and jumped at the chance to move into Everglades on the Bay North and South.
Now the Aventura project’s developer, Cabi Downtown, is in Chapter 11. Arevalo and about 70 other disgruntled buyers at the same twin-tower project want their deposits back.
According to a lawsuit filed last week in the bankruptcy case, Arevalo slapped down a deposit of $148,000 to buy the $495,000 condo in 2004.
The suit is one of hundreds being filed in South Florida as condo buyers try to salvage deposits out of the wreckage of the boom and bust condo market. Along the way, their attorneys are creatively using various state and federal consumer protection laws to recoup deposits that will be tested through the court system.
Everglades on the Bay at 244 Biscayne Blvd., was designed for 849 condos with a 15,000-square-foot health spa and 60,000 square feet of retail.
Cabi filed for Chapter 11 bankruptcy protection Aug. 18, the same day that lender Bank of America filed a foreclosure action on the completed condo project to recover a delinquent construction loan of $209 million, according to court documents.
In 2005, Bank of America and HSBC gave Cabi a $256 million construction loan that was due in December 2008, according to bankruptcy documents. That deadline was extended to March 2009, but that’s when Cabi stopped paying. Negotiations with lenders failed and the fight rolled into bankruptcy court.
Meanwhile, Cabi was being sued in state court by condo buyers who wanted their money back. That fight has also had to move to bankruptcy court.
“While we’re hopeful that through the bankruptcy we may be able to settle with a number of our unit purchasers, it’s our intent to vigorously defend against these actions,” said Cabi’s attorney, Mindy Mora of Bilzin Sumberg Baena Price & Axelrod in Miami.
In the court document explaining the reason for the bankruptcy filing, Cabi wrote that it “has been unable to renew, repay or refinance its secured mortgage debt which matured in March 2009 due to circumstances beyond the debtor’s control. In addition, the debtor has had a number of purchasers for condominium units cancel their purchase agreement as a result of the real estate market downturn, the debtor’s inability to reduce purchase prices [because of the lender] and the recession.”
The document said “As a result, the debtor has not been able to close on the sale of the all the units in Everglades on the Bay.” Indeed, Cabi sold fewer than 100 of the 849 units.
Elias Levy of Militzok & Levy in Hollywood, who represents the buyers, demands the return of the deposits, based on Chapter 720 of Florida state law governing disclosures made to buyers at the time of signing contracts. Levy alleges that Cabi, among other things, failed to disclose that homeowners would owe monthly fees to two homeowners associations. He said other disclosures, including a plumbing problem that caused water damage to 60 units and construction changes that scaled back the common amenities were also not disclosed.
“Our clients did not receive certain disclosures so under 720, they have the right to cancel the contract,” Levy said.
In addition, Levy argues that buyers should immediately get 25 percent of their deposit back under specific terms of the condo contract itself.
Levy said most deposits are between $50,000 and $150,000.