Chetrit’s lender alleges it stole $2M insurance payout for South Beach hotel damage

Foreclosure suit was filed earlier this year

Joseph Chetrit with the Tides Hotel (Getty, Tides via Facebook)
Joseph Chetrit with the Tides Hotel (Getty, Tides via Facebook)

UPDATED, July 2, 11 a.m.: Chetrit Group’s new lender alleges that the New York real estate firm stole $2 million in insurance money tied to damages at the long-shuttered Tides South Beach hotel, court filings show.

The latest allegations are part of a $45 million foreclosure lawsuit filed earlier this year by Safe Harbor Equity affiliate SHEDDF3 VNB LLC against CG Tides and other companies linked to the Chetrit Group over the loan backing the 11-story hotel at 1220 Ocean Drive.

Ocean Bank provided the financing in 2014, and the principal on the loan was due in December, according to the original complaint. Ocean Bank sold the debt to the Safe Harbor Equity affiliate in January. The loan is backed by the Art Deco hotel on Ocean Drive, plus a mixed-use building fronting Collins Avenue that Chetrit redeveloped.

Safe Harbor alleges that Chetrit defaulted on its loan when it allegedly pocketed the insurance check without the lender’s knowledge or consent. Safe Harbor is alleging that the default on the loan triggered Chetrit’s contractual obligation to pay interest from that date.

Joseph Chetrit, a founding partner of the family owned company, did not immediately respond to a request for comment. Safe Harbor declined to comment.

The Chetrit entity filed a motion for partial summary judgment in March, based on its argument that it did not default on the loan. “Safe Harbor cannot seek default interest based on that nonexistent default,” CG Tides is alleging.

In May, in a response to the Chetrit’s motion, the Safe Harbor entity states that the insurance proceeds from Hurricane Irma damage belonged to Ocean Bank, and that by keeping the check without Ocean Bank’s endorsement, the Chetrit affiliate allegedly committed grand theft.

Sign Up for the undefined Newsletter

“Although the Tides Defendants claim that they notified Ocean Bank of their receipt” of the $2 million insurance payout, “there is no competent evidence supporting this claim and plenty of evidence rebutting it,” according to the complaint.

Court records show that the Tides defendants alleged that Joseph Chetrit informed Ralph Gonzalez-Jacobo, then Ocean Bank’s chief lending officer, of the insurance check. Gonzalez-Jacobo died in late 2019, according to his obituary.

The Safe Harbor affiliate also alleges that the borrower “both ignored Ocean Bank’s requests for updates” and “misrepresented that the insurance proceeds had not been received.”

Emails included as attachments to the filing also show that the Chetrit ownership allowed insurance coverage to lapse at the start of hurricane season last year.

“There is currently no property coverage in place for Tides Hotel, Tides Village or Tides Garage,” reads one email from an assistant vice president at Alliant Insurance Services, and, later, “The insured has advised that he is not planning to bind the coverage.”

A hearing on the motion for summary judgment is set for July 21.

Also in South Florida, Chetrit had stalled on a major mixed-use development it planned along the Miami River until recently. That project, valued at $1 billion, is expected to have about 1,700 residential units, 330 hotel rooms, 266,000 square feet of retail and office space, and more than 2,000 parking spaces. The Next Miami reported that the developer applied for a construction permit for the first 632-unit tower.

Chetrit owns the shuttered Miami Beach Resort, an oceanfront hotel at 4833 Collins Avenue, as well as a project under construction in Collins Park in Miami Beach. In May, Chetrit Group scored a $62.5 million construction loan for the Collins Park project.