Miami Real Estate Attorney Blog

Florida's Third District Court of Appeal recently handed developers a loss that some are describing as cataclysmic in the ongoing battle regarding deposit recovery disputes.

Since the real estate market went bust back in 2007, developers and pre-construction contract purchasers of condominiums (many of which were never built) have flooded South Florida's court system with lawsuits. Many of the lawsuits focus on the purchaser's effort to have their deposit returned. In most cases, those deposits were either 10 or 20 percent of the purchase price.

Many of those cases often settle out of court. But the Third District Court of Appeal's recent decision handed a significant victory to purchasers, and a significant blow to developers.

The case centers on the interpretation of a Florida Statute. Specifically, Florida Statute Section 718.202. That statute states that the deposit shall be kept in separate escrow accounts. In other words, one account needs to be established for the 10 percent deposit to be spent on construction, and a second account needs to be set up for the 10 percent deposit to be held in escrow.

Before the Third District Court of Appeal made its ruling, a federal judge in Miami concluded that a purchaser had the right to rescind it sales contract if the developer failed to hold separate escrows.

After that federal court decision was decided, Florida's legislature quickly cobbled together a revised version of Fla. Stat. 718.202 in an effort "clarify" existing law. That clarification was done in an effort to negate the potential impact of that federal ruling on existing disputes between developers and buyers.

However, the Third District Court of Appeal's recent ruling cites to that federal ruling in support of its ruling that purchaser can rescind the sales contract. In so ruling, the Third District Court of Appeal stated that "[n]otwithstanding the Florida Legislature's apparent intention that the 2010 amendment and new section be applied retroactively, we conclude that this would impermissibly impair each buyer's pre-amendment contract rights."

This ruling is a very significant ruling, and a ruling that alters the current landscape of pending deposit recovery cases. Of course, if the developer did in fact place the funds in two separate accounts, as required by Florida Statute, and this recent case, then the developer should be in a position to shield off attacks from purchasers.

However, one of the more interesting discussion points in this case is that the Third District Court of Appeal did not give any credence to an advisory opinion issued by the State of Florida providing guidance for developers with respect to this issue.

That advisory opinion suggests that separate accounting records was sufficient to comply with the statute at issue.

So it is likely that most, if not all, developers relied on that advisory opinion. And if they did, then this recent case from the Third District Court of Appeal concludes that such reliance was misguided. Indeed, this ruling from the Third District Court of Appeal could greatly alter the landscape of these ongoing disputes in favor of purchasers, and against developers.

Consequently, if the developer failed to comply with F.S. Sec. 718.202, by failing to establish separate escrow accounts, then purchasers have a strong argument to potentially secure the recovery of their deposit.

What once symbolized the glut of condos in Miami now symbolizes the condo turn-around. The Icon Brickell condo faced major problems as speculators walked out on sales contacts, sat half-empty, and faced foreclosure.

However, the condo complex represents some of the things that are going right in this horrific housing market today.

The complex, composed of three towers, had two towers seized by a group of banks. That was one year ago, but since then 930 units have been sold. This means that a building that was 3/4 empty is now 3/4 sold. The third tower, which was not seized by lenders, has sold 518 of its 520 units.

The banks retained the services of Fortune International Realty to market the project and they have spearheaded the turnaround with their marketing efforts. According to the head of Fortune, the banks expected it to take three years for the building to sell out. However, its expected that they will sell out in 18 months. Fortune believes that the remaining 250 units will be sold by year's end.

Across the board we see price-slashing in the current market and this is what has helped Icon emerge from failure. For example, pre-construction sales had prices at about $600 per square foot. Presently, they are at about $440 per square foot.

With condo sales up 94 percent in April as compared to April 2010 and prices being cut, it certainly seems that amid this recession, the Miami condo market is a bright spot. Potential buyers need to take advantage of the current market conditions.

At Alvarez & Barbara LLP, we have extensive experience handling all types of real estate issues. We can handle all aspects of your real estate transaction. A major part of our practice includes real estate litigation as well. So, whatever real estate legal issue you're facing think of Alvarez & Barbara, LLP.

Continue reading "Icon Brickell Turn-around" »

Our firm has a proven track record in the area of deposit recovery. While we are currently aggressively representing the interests of many purchasers at the St. Regis Bal Harbour, ICON Brickll, the IVY, and other prominent South Florida projects, recover their pre-construction deposits, we previously spearheaded many of the defenses that the developers are currently using against purchasers.

The Related Group, developer of ICON Brickell and led by Jorge Perez, spearheaded the condo construction boom in Miami. Although the real estate market tanked almost 4 years, the Related Group is still dealing with many lawsuits stemming from the real estate market crash.

In Downtown Miami alone, the company constructed 5,500 condo units. By early 2008, the company faced hundreds of lawsuits filed by buyers, employees, vendors and subcontractors.

The Related Group has settled a great amount of the lawsuits filed by buyers trying to cancel contracts. Attorneys who represented these buyers, including our firm, have stated settlements were not easy to come by because the company slowly responded to lawsuits.

The ICON Brickell, a condo development built by the Related Group, has presented many legal problems. Apart from lawsuits filed by buyers, half of the condos in the 1,800 unit development were given back to the bank who financed the project.

Our firm has considerable experience in deposit recovery cases. The very fact that we previously represented developers places us in a unique position to anticipate and understand our opponents' next move. In fact, many of the tactics developers will use to defend a case were established by our firm.

If you find yourself fighting with a developer to recover your deposit, call our firm as we may be able to assist you. The Developers have attorneys fighting for their interests, and so should you.

Donald Trump is no longer affiliated with the unfinished luxury condo hotel tower on Fort Lauderdale beach that was to carry his name and that now faces foreclosure. The building was to be called the Trump International Hotel and Tower. This luxury condo hotel was going to be one of Fort Lauderdale's most glamorous locations, but today is in the midst of one of Ft. Lauderdale's stormiest legal battles. The legal battles include a foreclosure filed by the lender, many prospective purchasers trying to get their deposits back.

Our firm has a proven track record in the area of deposit recovery. While we are currently aggressively representing the interests of many purchasers at the St. Regis Bal Harbour, ICON Brickll, the IVY, and other prominent South Florida projects, recover their pre-construction deposits, we previously spearheaded many of the defenses that the developers are currently using against purchasers.

Yeas ago, more than 100 people placed deposits of 20% of the purchase price in order to buy condos in the 24 story tower with the hopes of purchasing what was supposed to be one of Ft. Lauderdale's most glamorous new properties. Studios and one and two-bedroom units were priced from about $500,000 to more than $3 million per unit.

The building, however, was never finished. Consequently, many buyers have filed suit in an effort to get their deposits back and some have even placed liens on the 298 unit project that was supposed to be finished back in 2009.

Many buyers alleged that the developer misrepresented Donald Trump's involvement in the project. Some suits even named Donald Trump personally and allege that Donald Trump and the developer both engaged deceptive advertising practices.

In support of that argument, the buyers point to promotional literature that states that Donald Trump was "committed to personal and direct involvement in everything his name represents" and described the project as a "signature Trump development."

Continue reading "Deposit Dispute Saga Rages on with Donald Trump over the Failed Trump International Hotel and Tower in Ft. Lauderdale as the Bank Moves to Foreclose on the Project While Buyers Attempt to Get their Deposits Back" »

Our firm has a proven track record in the area of deposit recovery. While we are currently aggressively representing the interests of many purchasers at the St. Regis Bal Harbour, ICON Brickll, the IVY, and other prominent South Florida projects, recover their pre-construction deposits, we previously spearheaded many of the defenses that the developers are currently using against purchasers.

A New York Federal Judge recently ruled that the developer, The Related Companies, must return a $510,000 buyer's deposit. This was because the developer failed to comply with the Interstate Land Sales Full Disclosure Act (ILSA). The developer's failure to comply with ILSA allowed the purchasers to rescind their $3.4 million dollar sales contract and get their deposit back, plus interest.

This ruling may be serve as a catalyst to entitle hundreds of recent condominium buyers to seek the return of their full deposit in such prominent South Florida projects such as the St. Regis Bal Harbour, ICON Brickell and others. Indeed, this ruling makes it possible for every buyer of a newly constructed condominium which has sold more than 100 units within the last three years to potentially obtain a refund of their deposit.

The reason this case is significant is because developers have scored many victories against purchasers on ILSA related issues. But this ruling may change the legal landscape as it relates to ILSA issues both nationally, and right here in South Florida.

ILSA is a federal law enacted back in 1968 that requires full disclosure from developers. It was originally intended to protect out-of-state land buyers from getting duped into putting money down for a piece of property they'd never seen before. But the law also applies to condo buildings with more than 100 units. Specifically, ILSA requires developers to record each condo purchase with the government. In other words, and according to this recent NY ruling, ILSA imposes an obligation to record every sales contract.

More often than not, however, the developers fail to record the sales contract. From the developers perspective, that requirement could be very burdensome and have collateral impact not necessarily intended by the consumer oriented ILSA. But that failure to comply with ILSA, and record those contracts, could be fatal to developers in the event a purchaser seeks the return of their full deposit. And this ruling, coupled with its rationale, and analysis, is certainly persuasive and helpful to all purchasers attempting to secure the return of their deposits in such projects as the St. Regis Bal Harbour, and others.

Continue reading "The Recovery of Your Pre-Construction Deposit at the St. Regis Bal Harbour, and other Prominent South Florida Condo Projects, May be Bolstered by a Recent Court Ruling" »

Our firm has a proven track record in the area of deposit recovery. While we are currently aggressively representing the interests of many purchasers at ICON Brickell, and other Florida projects, recover their deposits, we previously spearheaded many of the defenses that the developers are currently using against purchasers.

In December, a Federal Judge dealt extensively with the issue of whether Florida law, specifically Florida Stat. § 718.202 mandated the establishment of two separate escrow accounts when the purchaser's deposit amount is greater than 10% of the condo's purchase price. In a very lengthy opinion, the federal judge emphatically answered "yes." And the developer's failure to establish the two appropriate escrow accounts mandated by Florida Stat. § 718.202 rendered the purchase contract revocable. Accordingly, the purchaser would be able to seek the return of the deposit.

In the aftermath of that ruling, many developer friendly lobbyists ran to Tallahassee for purposes of passing legislation in an effort to minimize the exposure to developers as a result of that significant ruling. On June 1st, the governor signed into law a piece of legislation that negates the Federal Judge's prior ruling concerning a developers use of certain escrow monies, and accounts.

This recent development, however, should not deter any purchaser from seeking the return of their deposit if they are of the belief that the developer did not honor their contractual and statutory obligations.

Continue reading "Deposit Recovery at Icon Brickell and Other Florida Condo Projects Impacted By New Florida Law" »

Like many during the peak of the real estate market run up, Cinerest LLC, Tifeeret LLC and Tzion LLC along with managing member Yaron Horesh had plans of grandeur for the historic Jockey Club located at 11111 Biscayne Blvd., Miami, Fl. In 2005, Horesh's companies paid a whooping $18.6 million dollars for the land around the condo high rise. They planned to build a residential project on the land. Today, they have nothing to show for it.

What has become rather common in South Florida, Horesh, and his companies, failed to build on the property they purchased back in 2005. Despite plans to build a residential project, construction never commenced. Consequently, Seacoast National Bank, an administrative agent for a group of lenders, filed a foreclosure against Horesh, and his companies, back in 2008.

Horesh lost the foreclosure case, and now the property is scheduled to be sold during an online auction on August 2nd. This is yet another sad chapter of the real estate meltdown that many are experiencing daily in South Florida.

Indeed, so far this year we have witnessed the Icon Brickell turned over in a 'friendly foreclosure', prominent real estate developers suing their banks over projects, and others, like Horesh, that are just losing their properties in foreclosures.

Continue reading "Jockey Club in Miami Lost to Foreclosure " »

Perhaps no real estate development symbolizes the boom days of the real estate bubble, and the pop heard years later, better than Miami's very own Icon Brickell.

Icon Brickell was developed by the Related Group, led by Jorge Perez, the undisputed condo king of South Florida. In creating the Icon Brickell, Mr. Perez, and the Related Group, spared no expense. The massive project sits where the Miami River intersects with Biscayne Bay. It is comprised of 1,646 condos, a 28,000 square foot fitness area, an infinity pool the size of a football field, pool deck, sculptured columns, and many other luxuries symbolic of the opulence associated with the height of the real estate boom.

But instead of a defining triumph for Mr. Perez, and the Related Group, the Icon Brickell has come to symbolize the excess of the building boom, and real estate collapse. At the height of the building boom, many condos at the Icon Brickell were listed at over a million dollars. However, and as 2010 began, only 30 of the 500 Icon Brickell units that were ready for closing in December actually closed. Indeed, and what has become rather common in South Florida, many buyers have hired our firm in an effort to avoid closing on their units and secure the return of their deposits. Indeed, our firm has attained some successful results for buyers seeking the return of their deposits from Icon Brickell.

With angry buyers demanding the return of their deposits, rapidly decreasing property values, eroding equity, it should come as no surprise that the senior lenders at Icon Brickell began to call the shots. Moreover, and given the eroding market conditions, the writing was on the wall, and it was only a matter of time before the Icon Brickell was besieged with a foreclosure.

This week, the Related Group deeded over two 57 story towers back to its lender, a syndicate of lenders led by HSBC, in what is being described as a 'friendly foreclosure.' While the Related Group was aggressively offering steep discounts in an effort to entice prospective purchasers to buy, and existing buyer to close, it was not enough to hold back the mounting financial pressure and avoid giving part of the project back to its lenders in a 'friendly foreclosure.'

This latest chapter of the foreclosure saga playing out daily in South Florida is just another illustration of how foreclosures are impacting our real estate market. It also illustrates that foreclosures are being felt by both the wealthiest of individuals, and the poorest, alike.

Our attorneys have been in the forefront of fighting this fight. If you are faced with the prospect of falling into a foreclosure, or if you would like to assess your options regarding the potential return of your deposit in a condo project like the Icon Brickell, contact our office today.