guest blog by Deborah Goonan
Owners of roughly 30-year old, 48-unit, Tropicana Condominium in Sunny Isles Beach, Florida, decided they’d like to take advantage of the hot real estate market, and offer their condo for sale to the highest bidder.Back in 2013, a majority of Voting Members of the Association approved an amendment to the declaration, allowing for termination with 80% approval, bringing their documents in line with FL Statute 718.117, which became law in 2007.
Several Florida attorneys have gone on record touting the potential benefits of the Optional Termination provisions — later dubbed by many critics as “eminent domain for condos” — as a means for owners of older condo buildings located on high-value land parcels to “cash out” by terminating the association and selling to a willing developer. (see link to a blog below that appeared in the Sun Sentinel a few years ago)
Reportedly, the Association received one offer of $100 million. With the attractive offer on the table, the Association was easily able to obtain more than 80% of the vote. However, five units had recently been sold to new owners representing 10% of the condominium association. These five owners objected to the termination and filed suit against Tropicana Condo Association to block the termination. As you may recall from previous blogs, Florida statute maintains that 10% of members of an Association can challenge a termination approved by at least 80% of members.
So who are the “hold out” owners of these five condos? Tropicana Board members allege (in a $120 million counter suit) that they are straw buyers with ties to Manuel Grosskopf and Edgardo Defortuna, wealthy real estate moguls currently developing a 52-story Ritz-Carlton condo tower directly adjacent to the Tropicana. The Tropicana is only 9 stories, but if sold to another developer, the building would be razed and another new high-rise condo would be constructed in its place, effectively blocking ocean views for many of the Ritz-Carlton’s multi-million dollar units.
In this case, instead of wealthy investors staging a hostile takeover and kicking out owners at a substantial financial loss, we have what appears to be a small band of rogue buyers thwarting a termination to prevent a condominium sale to a rival developer!
How is that for the irony of unintended consequences?