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.