Marina developer sued over back fees

WEST PALM BEACH The owner of a unit at the Marina Grande condominium in Riviera Beach on Tuesday filed a lawsuit against the project's developer, alleging the company has not paid $427,000 in assessments on 126 unsold condo units.

The lawsuit is only the latest fallout as the region's housing market remains mired in a slump. With the rising rate of foreclosures, large numbers of homeowners are unable to pay their monthly association fees. That makes it harder for condominium and homeowners associations to keep up with costs for maintenance and security services.

But this lawsuit could be part of a new, emerging trend: Developers with unsold units unable or unwilling to pay association fees, too.

The suit against Marina Grande Ltd. was filed Tuesday by Jeanne Terrell in Palm Beach County Circuit Court.

The suit also names James Cohen and Shawn Johnson, both principals of Marina Grande Ltd. That company is associated with troubled Boca Developers of Deerfield Beach.

Spencer Sax, a Boca Raton lawyer, said he filed the lawsuit after efforts failed to get the developer to pay the unpaid association fees.

"We have been waiting for the developer to pay his assessments and we cannot wait any longer," Sax said.

The lawsuit says the association's funds "have been depleted" by the developer's failure to pay its assessments for several months.

As it is, Continental Property Services, the condo's management company, has not been paid, "and we are concerned that services will not continue," Sax said.

Because Marina Grande's 349 units have not all sold, the developer still controls the condo association, which consists of Cohen, Johnson and Terrell.

But the lawsuit says the condo association has refused to place liens on the units that have not paid their fees because the association is controlled by Cohen and Johnson - the developers' representatives.

"The conflict of interest is apparent in that these board members are unwilling to file liens against (the developer)," the lawsuit alleges, "yet this is the necessary action needed to be taken on behalf of Terrell to protect the interests of the unit owners and the association."

Terrell, who owns an eighth-floor unit, is the only independent member of the board of directors.

The lawsuit seeks an injunction forcing the developer to place liens on its units, or pay the past due assessments. In the alternative, the lawsuit seeks the appointment of a receiver to take control of the association.

Boca Developers lawyer Maurice Garcia said Tuesday that he had not yet seen the lawsuit and could not comment. Officials at Boca Developers could not be reached for comment.

But Terrell's lawsuit continues a string of bad news for Boca Developers. In recent weeks, the company has laid off staff, halted construction on its Biscayne Landings condo in North Miami Beach and been hit with liens from unpaid contractors.

Earlier this month, Wachovia Bank moved to foreclose on a Fort Lauderdale condo project called Las Olas Riverfront. The developer also is in default on a $275 million loan intended to help finance the Las Olas Riverfront makeover and some of the firm's other projects.


 

Boca Developers negotiating with lenders

South Florida Business Journal - by Brian Bandell and Oscar Pedro Musibay

Boca Developers is negotiating with its lenders to resolve debt issues on several projects that could include Peninsula II in Aventura, according to several sources.

As a result, Deerfield Beach-based Boca Developers may end up relinquishing several projects to the lender, the sources said.

The sales staff at Peninsula II has already been let go, a source said. A call to the number listed for the sales center was answered by a recording.

Calls to Boca Developers principal Brian Street were not immediately returned.

Boca Developers has several residential projects in the works throughout South Florida, including Townsend Place, Mizner Grand and Aragon in Boca Raton; Orchid Beach in Deerfield Beach; New River Las Olas in Fort Lauderdale; Hamptons South and Peninsula I and II in Aventura; Marina Grande North Miami Beach and Biscayne Landing in North Miami.

Biscayne Landing, its largest project, would not be affected, according to a source.

As of August, the company recorded 80 deeds for the 230-unit Peninsula II project. In October 2005, Boca Developers signed a $162.9 million mortgage with Key Bank National Association for Peninsula II.
 

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Lawsuit crucial to condo buyers trying to
nix deals over 'adverse' changes

Condo buyers trying to get out of their pre-construction purchase contracts soon will have their day in court.

Oral arguments in an important condo lawsuit are taking place Tuesday before the 4th District Court of Appeal in West Palm Beach. The issue: What is the definition of a "material and adverse" change to a condo?

"This case is being watched throughout the state of Florida," said Gary Nagle, the Juno Beach lawyer who filed for the appeal on behalf of his client, D&T Properties.

In 2005, D&T signed a contract to buy a $495,000 pre-construction unit at the Marina Grande condominium in Riviera Beach. But the partnership of two investors later objected to the developer's proposed 36 percent increase in the condo's maintenance fees.

In 2006, D&T filed a lawsuit against the condo's developer, Marina Grande Ltd., a company associated with Deerfield Beach-based Boca Developers. The suit sought to cancel the contract and recover a $99,000 deposit. Under Florida law, buyers can void pre-construction deals if developers make material changes that are adverse to a buyer.

What does that mean? No one knows for sure, but Palm Beach County Circuit Judge Jonathan Gerber took a stab at it. In a July 6 order, Gerber found that if D&T could afford the changes, the changes weren't material and adverse. He ruled D&T could afford the hike, so he ruled in favor of Marina Grande.

Not so fast, says Nagle. In a brief filed with the appellate court, he argues that Gerber's ruling creates an unequal playing field, with wealthy buyers unable to undo their deals and poorer buyers able to get out.

Nagle once had two dozen lawsuits filed by Marina Grande buyers trying to get out of closing on their contracts. Most lawsuits have settled, with buyers getting out of their contracts with about half their deposits back. The rest are on hold, pending the outcome of the case.