The Weekly Dirt: Condo buyouts just got dicier

A court ruling in a condo termination lawsuit could kill certain condo buyout deals across the state. 

Florida’s Third District Court of Appeal sided with a group of unit owners seeking to block the demolition of their condo building in Edgewater, a waterfront Miami neighborhood where development has been booming. 

The unit owners, who filed a lawsuit over the condo termination of Biscayne 21, alleged that an affiliate of Two Roads Development illegally amended the association’s condo declaration to change the threshold to terminate the association from 100 percent to 80 percent. Current state law allows developers to terminate with 80 percent approval, though 5 percent can block that vote. That’s why many look to lock up just over 95 percent support. Biscayne 21’s declaration predated current law. 

So why does this matter? For Two Roads, which is seeking a rehearing and has vowed to take the issue to Florida’s Supreme Court, it poses a major threat to the future of its planned development. The firm has been pre-selling condos at Edition Residences, the first of a three-tower project planned for the site. The higher court’s ruling last week may have affected potential financing, and has likely created concern from existing and potential condo buyers of the project. 

For developers (those that play in the buyout space), it could kill acquisition and financing deals in the works for properties where the association had 100 percent termination language in the condo docs. It also means that developers will probably focus on buildings where that language does not exist and they can pursue a termination with 80 percent of the vote. 

Also complicating the landscape is that the buildings that are likelier to have that language in their docs are older. The older the buildings, the more expensive to maintain, and the likelier that unit owners are facing major costs to maintain and insure their properties. Those are the buildings developers usually target. 

What we’re thinking about: The National Association of Realtors announced it was settling antitrust litigation over broker commissions with a $418 million settlement, pending court approval. What does this mean for you? Send me a note at kk@therealdeal.com. 

CLOSING TIME 

Residential: Tech investor and Nvidia board member Harvey Jones paid $74.3 million for the waterfront estate at 740 Hi Mount Road in Palm Beach. Candida Burnap sold the 10,467-square-foot, six-bedroom, six-and-a-half-bathroom mansion, which sits on a 1-acre lot. 

Commercial:  Colonnade Properties paid $76 million for the five-building office park called Douglas Entrance in Coral Gables. The sale price marked a nearly 25 percent discount off its previous sale price a decade ago. A joint venture between Miami-based Banyan Street Capital and Los Angeles-based Oaktree Capital Management sold the property at 800 Douglas Road. 

NEW TO THE MARKET 

Cosmetics heir William Lauder relisted his two adjacent, vacant Palm Beach parcels of land for a combined $178 million with a new broker. The oceanfront properties at 1063 and 1071 North Ocean Boulevard are now on the market with Christian Angle of Christian Angle Real Estate. Jim McCann of Premier Estate Properties previously had the listing when the properties were asking $200 million. They are each on the market for $88.9 million now. The 2.3-acre assemblage includes about 360 feet of beachfront. 

A thing we’ve learned 

In 1941, Disney fired a group of cartoonists, including the animator who created Goofy, for unionizing. 

Elsewhere in Florida 

• Gov. Ron DeSantis deployed more than 250 additional officers and soldiers from the Florida State Guard, Division of Emergency Management and other law enforcement agencies to the state’s southern coast to block Haitian migrants from entering the state, Newsweek reports. Gangs have taken over Port-au-Prince, the country’s capital, as the situation in Haiti becomes increasingly dire. Haiti’s president Ariel Henry announced last week his plan to resign.
• A bill that would have clarified the controversial 2023 law that created restrictions for foreign investors — particularly those from China — from owning property in the state will head to DeSantis’ desk to be signed into law without those clarifications. DeSantis opposed the changes, which could have drawn distinctions between people and businesses with controlling interests in companies that owned real estate, and those with minority interests. A lawsuit challenging last year’s law will move forward in April, according to the News Service of Florida. 
• DeSantis is also trying to ban lab-grown meat in Florida. Florida lawmakers passed SB 1084, which would ban and criminalize the production and sale of cell-cultivated meat in the state, Food & Wine reports. “You need meat, OK. And we’re going to have meat in Florida.” DeSantis said, according to CBS. “We’re not going to have fake meat. Like that doesn’t work.