The Weekly Dirt: Watershed ruling changes condo buyout landscape

Many condo terminations “just won’t work” following a recent appeals court ruling in Florida. 

The ones that we have reported on over the past year or so are all likely in some sort of limbo, or dead in the water, sources tell me. Condo buyouts, the precursor to developers terminating associations to eventually develop new projects on the sites, were already hard to accomplish. 

It’s a little more technical than this, but the ruling (for a longer explainer, feel free to catch up here) means that for any condominium association where a termination requires 100 percent buy-in by the unit owners, a developer probably can’t go in, buy the majority of units and vote to change the rules without 100 percent support. Some would take this route as a “back-door” way to push terminations forward. 

The Third District Court of Appeals’ ruling follows a lawsuit brought by a group of unit owners against Two Roads Development, which paid $150 million for the majority of units at Biscayne 21, an Edgewater condo in Miami, and has been preselling units at an Edition Residences planned on the site. Two Roads has said it plans to take the issue to the Florida Supreme Court if it does not secure a rehearing. 

Not every condo declaration has the same language as Biscayne 21, but many of the buildings targeted by developers do because they were built around the same time, before the 1970s. 

Some expect that developers will only pursue properties where the association agrees upfront to sell, with clear terms and enforceable deadlines. Increased transparency and fewer opportunities for holdout owners could mean that deals at buildings with the same declaration language could become less lucrative for developers. 

At Castle Beach Club, an oceanfront condo in Miami Beach that David Martin’s Terra has been trying to purchase for $500 million, the developer sent out a last chance offer to unit owners following the ruling in the Biscayne 21 case. 

In the letter, which was obtained by The Real Deal, Terra wrote that it is “willing to continue with the purchase of Castle Beach provided we can achieve 100% percent participation and avoid any of the legal issues brought up by that recent ruling.”

It’s unclear if that will happen. 

Getting unanimous approval on anything is tough, including agreeing on the weather outside, one attorney joked with me. 

What we’re thinking about: Who’s the buyer of the Palm Beach estate asking $187.5 million? It’s the priciest home on the market in South Florida, and it went into contract last week. Send me a note at kk@therealdeal.com. 

CLOSING TIME 

Residential: Convenience store chain owner G. Robert Sheetz sold the waterfront spec mansion at 415 East Alexander Palm Road in Boca Raton’s Royal Palm Yacht & Country Club for $25.9 million. A land trust purchased the 0.8-acre property.

Commercial: Bethesda Hospital, a subsidiary of Baptist Health South Florida, sold a former medical office campus in Boynton Beach for $37.7 million. A joint venture between Foundry Commercial and Wheelock Street Capital acquired the vacant 30.7-acre site at 3800 South Congress Avenue, records show. 

NEW TO THE MARKET 

A renovated 7,800-square-foot home on the ocean in North Palm Beach hit the market for $39.5 million, almost double its previous sale price two years ago. The five-bedroom, six-and-a-half-bathroom house at 11432 Turtle Beach Road is listed with James Kenny of K2 Realty. A company led by Dan Lonergan and Sara Camara paid $22 million for the property in 2022. 

A thing we’ve learned 

If you accidentally invert the latitude and longitude for properties in Miami, you’ll end up in Antarctica, according to my colleague Adam Farence. 

Elsewhere in Florida 

• A group of about 50 home insurers operating in Florida turned a profit for the first time in seven years, netting nearly $150 million, Newsweek reports. Soaring premiums have contributed to an insurance crisis in the state, where the average homeowner’s premium rose 42 percent compared to 2022, to $6,000 a year. 
• Walt Disney and DeSantis reached a settlement in their highly publicized legal battle over the district, home to Walt Disney World resort, NPR reports. The Central Florida Tourism Oversight District board will work with Disney to update its comprehensive plan. A last-minute deal that gave Disney power over all development decisions was found to be “null and void” under the terms of the new settlement. DeSantis went after Disney after former Disney CEO Bob Chapek said he would work to overturn the “Don’t Say Gay” bill.