One Bal Harbour associations settle suit over shared utility, valet expenses

Hotel-condo association had sued its residential counterpart, which countersued

Miami /
Jan.January 14, 2022 03:30 PM

One Bal Harbour at 10295 Collins Avenue in Bal Harbour, FL (Seaside Properties Group, iStock/Illustration by Steven Dilakian for The Real Deal)

One Bal Harbour’s hotel-condo and condo associations settled their litigation over alleged overcharges for shared utility, parking and beach service expenses.

In a 2019 suit, The Hotel Condominium Association claimed that in a “power grab,” The Residences at One Bal Harbour Condominium Association in 2014 changed the declaration governing how the associations pay for expenses. The condo association, which oversees 185 units, essentially decreased its own share and tacked higher charges onto the hotel association, according to the complaint.

The hotel-condo association oversees 124 units that are individually owned condos but can be rented out through One Bal Harbour’s Ritz-Carlton hotel flag. The 26-story tower at 10295 Collins Avenue in Bal Harbour was completed in 2007.

Both associations filed to dismiss the litigation in December, citing a confidential settlement. Miami-Dade Circuit Judge Michael Hanzman ordered all claims dismissed.

The roots of the issue began in 2013 when the condo association bought through a bankruptcy auction a third portion of the building, the so-called hotel facilities, consisting of the spa, restaurant and lobby, according to the complaint. At court hearings prior to that deal, the condo association had allegedly promised that it would loop in its hotel counterpart if it opts to tweak the declaration governing both associations, including how their shared expenses are divided, the suit states.

Yet, the condo association “unilaterally” changed how bills are divided, according to the complaint. Specifically, the hotel association now was on the hook for 40 percent of the natural gas and water bills and a third of the electricity and diesel bills for common areas, up from its previous responsibility for 13 percent for all utilities, according to court filings.

The hotel-condo association’s attorney declined comment, citing the confidential settlement. The condo association’s attorney did not respond to a request for comment.

In its court filings, the condo association argued it can change the declaration because it owned the hotel facilities. The hotel association countered that changes specifically for shared expenses could only be made if its usage is metered, which it was not.

The condo association also allegedly illicitly tacked valet parking expenses onto the hotel-condo association, which could have only been done if its valet usage was measured, and created a beach service fee for items such as towels, lounge chairs and umbrellas, even though such a fee did not exist under the original declaration, according to court filings.

In its legal response, the condo association countered that the hotel-condo association’s valet usage was measured and the lawsuit only referenced parts of the original declaration, and that the hotel-condo association was on the hook for other shared expenses since the beginning, besides what it cited in its suit.

In a countersuit, the condo association argued that the hotel-condo association actually benefited from the restructuring of the shared expenses, as it was left paying $1.7 million less than it did before. In the meantime, the condo association ended up paying $2.9 million more than it did before, according to the counterclaim. Insurance costs also decreased for the hotel-condo association.

Soon after buying the hotel’s spa, restaurant and lobby, the condo association then sold the property to LH Hotel, which ties to the Lowenstein family’s Miami-based Lionstone Development. Under the tower’s declaration, the owner of these properties also runs the hotel flag, according to court filings.

Lionstone rebranded the hotel portion at One Bal Harbour as a Ritz-Carlton and completed $4.5 million in improvements to the spa, restaurant and other common areas, according to its website.

Lionstone owns another Ritz-Carlton in Miami Beach along with Flag Luxury Group. In 2020, the two companies entered a joint merger with Ben-Josef Group, which owns the Sagamore.





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