Several buyers at the W South Beach condos are demanding their deposits back, claiming developers led them to believe there were to be more units and/or a second pool at the chic Miami Beach condo hotel.
The problems at the W South Beach condos mirror the dismal market for Miami condo-hotels and the latest wrinkle in the ongoing flood of buyer rescission cases making their way through Florida courts.
Dennis Freeman, a Miami Beach attorney handling one of the cases says “The biggest problem at the W right now is the values have declined so substantially, and nobody will lend on that”.
In an attempt to collect the full 20% deposit back, lawsuits are alleging that several unfavorable changes were made to the property. 2201 Collins Fee LLC, and ultimately by New York-based TriStar Capital and RFR Realty hold the project.
Real estate investor Kamyar Kadivar and three other buyers filed a lawsuit in federal court alleging that the developer reduced the number of units to 411 from 523 without revising the calculations for how much of the total property the units represent. The suit also states the project represented the unregistered sale of securities as well.
Another lawsuit claims that the buyer received a smaller unit that included a door to the adjacent unit that was not previously disclosed. The South Beach condos were to have two pools but the expanded restaurant plans took over the space. The developer also reduced the number of trees planted outside.
Condo Vultures released data on March 10 showing that, as of December 31, only 42 of 408 units in the W South Beach condos have closed, at an average of $1.8 million a unit, or $1,806 a square foot. The overall gross revenue generated from selling 10.3 percent of the units is $73.6 million.
Nearly 1,450 of the 5,600 new condominium units developed in Miami Beach’s trendy South Beach neighborhood in the last seven years are still unsold, Condo Vultures Principal Peter Zalewski said.
Contributed by MLR Realty
