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Article Courtesy of The South Florida Business Journal
By Brian Bandell
Published October 24, 2018
The plans by JMH Development Managing Partner Jason Halpern to terminate an
older condominium in Surfside and redevelop the beachfront site as a luxury
condo were dealt a significant setback in Miami-Dade County Circuit Court.
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The developer’s plan to terminate the Surf House
Condominium Association is not valid and the remaining four unit owners, out
of 36 total units, can’t be forced to sell their condos to the developer,
Miami-Dade County Circuit Judge Michael Hanzman ruled Oct. 16. That means
the building at 8995 Collins Ave., which was constructed in 1966, will
remain a condo for now.
In 2015, JMH Development affiliate Surf Club Condominium Views LLC acquired
31 units in the Surf Club for $55 million. It bought one more unit for $2.18
million in 2016, and filed a notice to terminate the condo association.
The developer then filed a plan with the town of Surfside to redevelop the
property into a 55-unit condo-hotel. The site is just south of the Four
Seasons Residences at the Surf Club, where new condo units have been selling
for more than $2,000 a square foot.
In 2016, the owners of the four remaining units in the Surf House filed a
lawsuit against the Surf House Condominium Association and the developer,
alleging that the condo termination plan was not legal. Miami-Dade County
Circuit Court Judge Rodolfo A. Ruiz ruled in 2017 that the plan was valid,
but he was reassigned to a different court and Hanzman was assigned to this
case.
Asked to reconsider the ruling, Hanzman decided that the procedure for
terminating the Surf House condo should be the same as when the association
was established. It wouldn’t be fair to the unit owners to retroactively
change the rules that were in place when they bought their units years ago,
the judge ruled.
The condo association documents don’t have a specific termination plan, but
they refer to state law at the time, which required a unanimous vote to
terminate the condo association. After buying 88.8 percent of the units, the
developer voted to lower the threshold for termination to 80 percent.
Hanzman ruled this was not proper. |
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JMH Development wants to redevelop the Surf House
condo, at 8995 Collins Ave. in Surfside, into a 55-unit condo-hotel,
but litigation has stalled the project.
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The developer can’t force the four units owners to sell
it their condos based on appraised value, the judge ruled. It’s possible the
property could be converted to “tenants-in-common” ownership, where the
entire property would be sold to a third party and each unit owner would
receive a proportional share of the price, the judge ruled.
“You can’t retroactively apply that change because, when
you bought the property, you have a vested right in your property and
someone can’t change rules of the game to deprive you of your fundamental
property rights,” said Gunster attorney Mike Marcil, who represents the four
condo owners. “If they bought the condo and under those rules unanimous
approval was needed [to terminate], the association can’t just change those
rules.”
The plaintiffs asked the judge to allow them to block the condo association
from terminating under a 2008 state law that allows 10 percent of unit
owners to veto a termination. Hanzman ruled that the law shouldn’t be
applied retroactively.
Attorney Peter F. Valori, who represents the condo
association, said the court did allow the property to be disposed through a
“partition action,” where the condo owners would be treated as
tenants-in-common.
Attorney Chad Tamaroff, who represents the developer, declined comment.
Marcil said three of the four families still live in the building. One
family moved out because, he alleges, the condo association has not done
proper upkeep of the building, allowing the temperature in the common areas
to get too hot and closing the parking garage. The 32 condos owned by the
developer are vacant, he said.
“My clients want to stay there. They are not sellers at all,” Marcil said.
“It’s their own little piece of paradise on the ocean. There’s no place else
to buy an affordable condo there.”
Valori said the association has taken "appropriate steps" to maintain the
association property and has responded to each inquiry of Marcil's clients.
"The issues regarding maintenance are a side show which detract fromthe real
issuesin the case and are merely an attempt to delay the inevitable," Valori
said.
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