Co-op board sues developer for allegedly deceptive bids to buy out unit owners

The co-op board of an oceanfront residential complex in Palm Beach sued companies led by a developer that allegedly lied to convince residents to sell their apartments.

The board of the Ambassador Hotel Cooperative Apartments sued two companies led by Adam Schlesinger, a West Palm Beach developer who wants to turn the residential co-op into a hotel.

The Ambassador is organized as a co-operative where residents own shares in a company, not a condominium where they would own individual units.

Last year, Schlesinger’s companies – Brazilian Court Beach Resort and Copperline Partners – started urging Ambassador apartment owners to sell their co-op shares so he could redevelop the Palm Beach property, according to the lawsuit.

Schlesinger told the Palm Beach Post that owners of 65 of the 93 apartments at the Ambassador Hotel have accepted his offers to buy them out. Schlesinger also told the Post that the lawsuit against his companies is “frivolous and without merit.”

Maurizio Russo is one of the Ambassador residents who has accepted an offer from Schlesinger to buy his apartment. But the co-op board must approve the sale before it closes. If approved, Russo would get $240,000 for a 700-square-foot studio apartment he bought in 2015 for $70,000.

Ana Davie and her husband bought a 1,225-square-foot Ambassador apartment in 2015 for $400,000, and after listing it for sale, they had no bids before Brazilian Court offered to pay two times their asking price.

But in its lawsuit, the co-op board alleged that Schlesinger lied to unit owners by claiming they face costly future assessments because the Ambassador is a “ticking time bomb” of multi-million-dollar repair bills. The board says it has arranged funding for property upgrades “at favorable terms.”

The co-op board also claims in its lawsuit that Schlesinger has “physically confronted stockholders on cooperative property and pressured them to sign immediately or else lose out on any purported benefits.”

The suit accuses Schlesinger’s companies of using unfair and deceptive trade practices and tortuously interfering with negotiations to renew leases with commercial tenants at the Ambassador, including a gift shop, beauty salon and restaurant.

Schlesinger told the Post that the Ambassador Hotel has broken balconies, antiquated elevators, aging mechanical systems in need of repair, and common-area interiors without air conditioning.

Property records show the Ambassador Hotel was built in phases in 1947 and 1963. The 93 units in the complex at 2730 South Ocean Boulevard are valued at $16.1 million by the Palm Beach County Property Appraiser. [Palm Beach Post] – Mike Seemuth