Allegedly rampant illegal short-term rentals at Miami’s Opera Tower lead to lawsuit seeking class action

For years, the Opera Tower Condominium Association has allowed illegal short-term rentals to run rampant, causing building expenses to skyrocket and property values to crater, according to a recently filed lawsuit.

The complaint, filed in Miami federal court on June 21 and seeking class action status, is the latest legal tussle involving unauthorized rentals of 30 days or less at the 635-unit luxury tower at 1750 North Bayshore Drive in Miami’s Arts and Entertainment District.

The plaintiff is Joseph Dispoto, who purchased an Opera Tower one-bedroom unit in 2007. Yet, as many as 200 unit owners would be eligible for class action status, and damages would exceed $5 million, according to the suit. The defendants are the building’s management and leasing entity Opera Tower LLC, the Opera Tower Condominium Association and condo board directors Dean Warhaft, Joseph Arthur and Michael Smith.

Opera Tower LLC also owns the building’s commercial spaces and is managed by Jerome Hollo, executive vice president of Florida East Coast Realty, which developed the 56-story tower.

Warhaft, the condo board’s president and Florida East Coast’s chief development officer, declined comment. Condo association attorney Jose Baloyra and Dispoto’s lawyers, Janet Varnell and Brian Warnick, did not respond to phone messages and emails requesting comment.

The lawsuit claims the condo association and its directors have violated the city’s zoning code Miami 21 that prohibits short-term rentals in multifamily buildings such as Opera Tower. About 200 units in the building are actively listed and available for short-term rentals, the suit says.

Opera Tower LLC also engaged in renting condos for 30 days or less until February 2020 through a company called Opera Suites and Marina. Opera Suites and Marina, the lawsuit alleges, had its own check-in desk at Opera Tower for a period of time and actively advertised its short-term rental services on various hotel booking websites.

Last year, the condo association sent a July letter to owners admitting that short-term rentals had deteriorated property values. A month later, Opera Tower received a cease-and-desist letter from the city of Miami to stop all short-term rentals, according to the complaint.

“Residents and owners at the Opera Tower Condominium routinely made complaints to the association’s management about short-term rentals interfering with their safety and quality of life,” the lawsuit states. “Rather than protecting the Plaintiff and other unit owners, Defendants are actually attempting to further enable short-term rentals in violation of their fiduciary obligations to Plaintiff and the unit owners.”

According to the complaint, the condo association conducted a financial review in 2019 that determined the building’s total operating expenses jumped 104 percent, and that the impact from dealing with short-term renters constituted 12 percent of the building’s $5.2 million operating budget.

“The financial review showed that the current management team is not properly
staffed to operate a high turnover short-term rental property,” the lawsuit alleges. “It resulted in the reserves being woefully inadequate.”

As a result, unit sales experienced a dramatic decline in the first half of 2019, along with a decline in property values, according to the complaint.

In a lawsuit the condo association filed against Airbnb last year, Opera Tower documented the issues highlighted in Dispoto’s complaint, such as the escalating expenses and the city’s cease and desist letter. But it blamed the online short-term rental company and rogue unit owners for the proliferation of short-term rentals in the building.