UPDATED, July 16, 11:20 a.m.: Two wealthy real estate families are duking it out in a legal battle linked to coronavirus, and it’s playing out at one of South Beach’s most fashionable condo-hotels.
A company tied to New York developer Aby Rosen’s RFR Realty wants its nearly $1 million deposit back for the failed purchase of a dozen condos at the W South Beach, citing force majeure due to the pandemic.
But the seller, tied to the Nakash family that owns Jordache Enterprises, wants to keep the deposit, resulting in a string of back-and-forth litigation.
The RFR affiliate, 2201 Collins Fee LLC, sued three companies controlled by the Nakash family: Nakash Mia Condo Investments LLC, Two W Unit LLC, and Nakash Holding LLC, in Miami-Dade Circuit Court in late June. The RFR affiliate alleges breach of contract, and “breach of the implied covenant of good faith and fair dealing” tied to the $10.8 million sale of the 12 condos.
In early July, the Nakash entities countersued, alleging breach of contract and declaratory relief. Both are fighting for the deposit, which is in escrow.
The Nakashes own a portfolio of commercial and residential real estate, including the former Versace Mansion on Ocean Drive in Miami Beach, and the Setai Miami Beach hotel.
Attorneys representing both parties did not respond to requests for comment.
According to the first lawsuit, the Rosen and Nakash entities signed a contract for the sale of 12 units at the W South Beach in December, with plans to enroll the units into the hotel’s condo rental management program. Both buyer and seller agreed to increase the deposit to $808,350, up from nearly $539,000.
The hotel, at 2201 Collins Avenue in Miami Beach, was developed by David Edelstein’s Tristar Capital, RFR Realty, and the Related Companies. Property records show that 2201 Collins Fee LLC owns 215 units in the beachfront tower.
The December contract allowed Nakash to move the closing of the 12 condos up from the planned Aug. 7, 2020 closing date with 60 days of prior notice. On March 16, days after the World Health Organization declared the coronavirus outbreak a pandemic, Nakash notified the RFR affiliate that the closing date would be bumped up to May 15, according to the lawsuit.
Hotels and short-term rentals in Miami-Dade County were shut down less than a week after Nakash notified the buyer that the closing date would be moved up. The lawsuit calls the timing surrounding the decision to accelerate the closing “precarious to say the least.”
“That is to say, the Nakash Defendants decided to accelerate the Closing Date three days after President Trump declared a national emergency in response to the Covid-19 global pandemic,” the lawsuit states. The suit alleges the Nakashes “doubled down on their lack of good faith” by rejecting that the force majeure event exists under the terms of the contract.
Though short-term rentals were allowed to operate again, Miami Beach again shut down all vacation rentals on Wednesday due to the rising number of positive coronavirus cases.
As a result of closures, the RFR affiliate tried to get out of the contract and is seeking the return of its $808,350 deposit, citing force majeure. The Nakashes, in their lawsuit, are seeking the release of the deposit as declaratory relief for RFR allegedly breaching its contract.
In New York, the $25 million CMBS loan backing the Core Club space, owned by RFR Realty, is now in special servicing due to the pandemic.
An earlier version of this story incorrectly identified the number of units 2201 Collins Fee LLC owns at the W South Beach.
Contact Katherine Kallergis at [email protected]