Article Courtesy of Florida Politics
By Peter Schorsch
Published May 22, 2016
Miami Beach. It’s a world-class tourist destination right
here in our backyard. It’s where people go to relax and enjoy beautiful
beaches, take in the five-star dining and nightlife, spend their retirement,
and invest in real estate with values that have nowhere to go but up.
Unless, that is, you happen to own a unit in the Carillon Miami Beach, a
three-tower, beachfront, luxury hotel/condo on Collins Avenue.
Until recently, the development was the
southern outpost of the “healthy luxury” brand, Canyon
Ranch, but was purchased in 2014 by an Illinois-based
private equity firm, Z Capital. Since the acquisition, the
new owners have engaged in a concerted campaign to de-condoize
the property, by using every tactic at their disposal to
bully unit owners, make their once luxurious living
situation undesirable and artificially drive down property
values so Z can swoop in like vultures and gobble them up at
sub-market prices. |
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At least, that’s what the condo board of Carillon’s
Central Tower is alleging in a lawsuit filed recently in Miami-Dade County’s
11th Judicial Circuit. And before that filing, the board of the South Tower
entered a similar, though narrower in scope, complaint against Z Capital,
charging a lack of transparency in the condo documents Z is trying to impose
on that board.
The Central Tower’s suit is stunning in both the volume and content of its
allegations against Z Capital. The board’s attorney, Ron Lowy, of Lowy &
Cook, P.A., is nearly 70 pages long, with 16 separate complaints against Z,
backed up by 282 allegations. A press release from the Central Tower’s
board, sent on May 3, summarizes their suit by claiming Z Capital has,
“engaged in an unlawful against … owners” to “artificially drive down
property values,” as well as other acts in “clear violation of the Florida
Condominium Act.”
The uproar in Carillon’s Central and South Towers (like Westeros, one can
speculate that the North will likely join the fray soon enough, too) is far
from an isolated incident. El Nuevo Herald and Univision 23 recently shined
a light on the endemic issues in South Florida of developers bullying and
defrauding condo owners. State Sen. Miguel Diaz de la Portilla has been a
leading voice for reform of the state laws that govern condo associations
and owners have been rallying in Miami for change.
Among the specific allegations the Central Carillon Board has levied against
Z Capital:
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Z Capital has seized ownership of virtually all
amenities and common areas at the property, including its spa and pool
and is charging owners fees of up to $70 a day for their guests to
access those facilities;
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Z Capital is making it virtually impossible for
owners to independently rent or lease their units at a profit, thereby
decreasing unit values at a time when comparable units in Miami Beach
are skyrocketing in price;
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In the course of driving down property values, Z is
aggressively buying up available units, purchasing 43 since acquiring
the building in 2014;
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Since 2014, average sale price of Carillon units
dropped by nearly $100,000, or 15 percent. During that same period, the
average sale price of Miami Beach condo has risen 12 percent. Do the
math: Carillon owners have seen a 27 percent downward swing on their
investment since Z Capital took over;
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Z Capital has conducted themselves in near total
opacity, assessing fees and conducting maintenance and improvements with
a complete lack of transparency to the owners paying those assessments;
Owners have neither been made privy to contracts Z
Capital has executed before, during or after work has been done in the
building, refusing to prove that they engaged in a competitive bidding
process, or allowing the association to audit their expenditures or have
even basic access to records.
This suit may seem like a non-sequitur for FloridaPolitics.com, but this is
one to watch.
A revolt is fomenting in South Florida’s condo associations, from small
buildings with modestly priced units, to big-name luxury properties like the
Carillon.
Another suit, similar to one filed by Central Carillon, was brought by
Fontainebleau unit owners a few years ago, and Fontainbleau eventually
settled for a sum rumored to be in the tens of millions. We are going to
watch how this and other suits play out in the circuit courts, especially
since Carillon’s claims are potentially precedent setting if they get
resolved in court rather than a settlement.
Don’t expect this suit to go quietly into the night. Don’t expect these
larger issues to stay out of headlines or be isolated to South Florida. This
could end up being a significant problem in the 2017 legislative session.
And always read your condo association documents closely. Don’t assume what
you agree to is standard and fully protects your ownership interest under
Florida law. The vast preponderance of evidence suggests that it doesn’t.
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