Keys retreat or alleged rip-off? Unit owners block condo redevelopment proposal at Ocean Reef Club
"The condo I acquired to enjoy time off with my family has evolved into the worst possible real estate investment and a source of great stress and financial loss” Debora Overholt
A plan to tear down and rebuild a 1970s condo building at the exclusive Ocean Reef Club in Key Largo is being met with stiff opposition from eight current owners who accuse the developers of trying to muscle them out through a condo termination agreement.
Martin Levine, principal of New York City-based Redwood Real Estate Group, has teamed up with John Grunow, president of leasing company Reef Rentals, who owns dozens of properties in the community, to redevelop the 48-unit Golf Village Condominium Apartments into The Residences at Ocean Reef. The new proposed development would still have the same number of units, but the building’s footprint would be much larger and offer luxury amenities, according to the developers.
However, owners Brian Castle, Karyn Thiele, Debora Overholt, Peter and Claudette Lingley, Thomas and Maria Tyghem and a holding company called Unit 22A Golf Village are objecting to the termination plan presented by Levine and Grunow, who is also president of the Golf Village condo association.
Overholt, one of two owners who spoke to The Real Deal, said Levine and Grunow want to take over their properties for “pennies on the dollar.”
“I never imagined that in a place like Ocean Reef, greedy developers would be enabled to force me and my neighbors to sell our homes, in many cases for less than our mortgages,” Overholt said. “In my case, for less than I paid for the home in 2007. The condo I acquired to enjoy time off with my family has evolved into the worst possible real estate investment and a source of great stress and financial loss.”
The eight objectors constitute roughly 14.6 percent of Golf Condo unit owners, according to letters from their lawyers to the condo association, obtained by TRD. Prior to July 1, state law barred condo terminations from moving forward if 10 percent or more of unit owners did not want to sell. The threshold has now been lowered to 5 percent under amendments to Florida’s condo laws approved by Gov. Rick Scott and the state legislature during the most recent legislative session.
In a June 29 phone interview, Levine downplayed the stalemate with eight unit owners, insisting he and Grunow had reached “an understanding” with the holdouts. “They decided to band together and throw some weight around as the last apartment sellers,” Levine said. “They have not filed an objection to the termination plan, nor are they going to.”
Yet, a day earlier attorneys for the eight objectors did just that. “Timely notice is hereby given of objection to, and intent to contest, the termination plan,” states a June 28 letter to the Golf Village condo board. Overholt said while “discussions” have taken place, “no contracts have been executed.”
According to another letter sent to the board on May 26, Grunow and Levine “have together aggressively engaged in a systematic scheme to acquire ownership and control of the units within Golf Village.” Specifically, Grunow would block any attempts by Golf Village owners to sell their units to outside buyers by exercising a right to first refusal, the letter states. The eight unit owners allege Grunow would only grant the waiver if the would-be purchaser agreed to enter into a second contract to sell the unit at a later date to OR Residences LLC, a company controlled by Grunow.
In the letter, the owners also accused Levine and Grunow of violating Florida law by improperly calling board meetings.
Levine said Golf Village owners are getting a good deal for their homes, noting the building needs major upgrades that would cost $75,000 to $80,000 in assessments per unit. He noted that unit owners who are in agreement with the termination plan will be paid on the fair market value of the land and not just their unit. “We have been purchasing units at $300,000 to $350,000, in excess of what they were going for and for more than they could trade for today,” Levine said.
In addition, unit owners who don’t buy another property in Ocean Reef can sell back their equity membership to the golf club. “The membership is currently around $225,000,” he said. “There are some owners who paid $35,000, $55,000 or $100,000 when they purchased unit. They get the difference in profit.”