Two Roads Development faced another significant setback in their pursuit of a buyout at the Biscayne 21 condominium building, a site they envision transforming into luxurious condo towers. This recent court ruling could potentially establish a precedent, complicating future efforts for developers aiming to replace aging structures with new constructions.
A group of ten owners from the 61-year-old Biscayne 21 condo building in Edgewater has initiated a lawsuit seeking to prevent the demolition of their home after Two Roads Development acquired the majority of the units on the property.
The Third District Court of Appeal delivered a decisive ruling this week, blocking Two Roads’ condo termination plan and mandating the trial court to implement a temporary injunction. The court also denied Two Roads’ request for a rehearing, as detailed in coverage by The Real Deal.
For nearly a year, the developers and holdout owners awaited this court ruling. The judges determined that the original declaration of the condominium effectively grants each unit owner a veto over any plans for termination.
In response to the ruling, Two Roads plans to appeal the decision to the Florida Supreme Court.
“We are pleased that the Third District Court of Appeal has certified this case to the Florida Supreme Court,” stated Taylor Collins, Managing Partner and co-founder of Two Roads. “This is exactly what we asked for from day one, and we believe the issue deserves to be heard by the highest court in the state. We look forward to continuing this process and remain confident in the path ahead.”
Last year, Two Roads made headlines when it purchased the majority of the units at Biscayne 21 for $150 million. Following this acquisition, the developers intended to launch sales for their planned luxury condo towers branded by Marriott International’s Edition.
However, the pathway to terminating the condo association came to an unexpected halt. In 2023, a group of ten residents out of the 192-unit Edgewater condo tower filed a lawsuit against Two Roads, aiming to block the demolition of their home. The condo association accused Two Roads of unlawfully reducing the required approval threshold for a buyout from 100% to 80%.
Initially, a lower court granted Two Roads permission to proceed, but the tide turned when the Third District Court of Appeal reported issues with that decision in a March 2024 ruling, which imposed a temporary injunction against the developers. Recently, the appellate court upheld this ruling, instructing the Circuit Court for Miami-Dade County to revisit the case.
Attorneys Glen Waldman and Jeffrey Lam, representing the holdout owners, expressed satisfaction with the court’s decision. They noted, “They obviously took the time to get it right. Our clients have been out of their forever homes for close to two years because of the developer’s cavalier attitude toward the governing documents of the condominium and the livelihoods of our clients.”
The legal struggles surrounding Biscayne 21 have painted it as a glaring example of the complications that can arise with condo terminations in South Florida. Developers are becoming increasingly cautious in pursuing condo terminations, as vague legal interpretations and potential prolonged litigation pose significant risks.
Meanwhile, the ruling is set against a backdrop of worrying trends in the condominium market, described as a “doom loop.” This cycle is substantially influenced by new recertification and reserve funding mandates for aging condo buildings, a legislative response to the tragic Surfside condo tower collapse in 2021 that resulted in 98 fatalities.
While this ruling may not halt all condo buyouts, experts believe it may deter some developers, investors, and equity stakeholders from pursuing similar deals. Attorney Joseph Hernandez of Bilzin Sumberg noted the implications of the ruling, stating, “This case could be going on for another year and a half, two years. Who knows? And that’s a problem, because of that black cloud space it sits there. It’s not resolved. So if we start talking about our savior, it has got to be the legislature at this point.”
Despite hopes from developers for a clearer pathway to force condo terminations and demolitions in the latest legislative session, Governor Ron DeSantis signed an updated condo safety law that failed to address these concerns.
The ruling has drawn attention to a new legal precedent that wasn’t previously established in Florida. Hernandez remarked, “What’s disturbing to me is that it kind of establishes a new precedent that didn’t exist before this case. When there’s 100% approval required for a termination, it’s an implied veto right on behalf of all the unit owners. That’s never been done before. This court basically just created it.”
image source from：bisnow
