Florida Court Ruling Throws Wrench in Condo Redevelopment Plans

A March 2024 Florida Third District Court of Appeals decision has sent shockwaves through the real estate industry, particularly those involved in the redevelopment of older condominium buildings. The ruling, which blocked the termination of a Miami condo association, has significant implications for developers, lenders, condo associations, and investors.

At the heart of the Angelica Avila, et al. v. Biscayne 21 Condominium, Inc., etc., et al. case is Biscayne 21, a 13-story, 192-unit building in Miami’s Edgewater neighborhood built in 1964. A group of ten owners successfully challenged a lower court's decision allowing the developer, Two Roads Development, to lower the termination threshold from unanimous consent to 80%. The appellate court sided with the homeowners, citing the original condo declaration which required 100% approval for termination. Two Roads paid $150 million for the property in 2022 and by the time the case was decided had already begun demolition and marketing its planned replacement with three 649-foot residential towers with 705 condo units, ground-floor retail, 971 parking spaces, extensive amenities, and waterfront access.

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This decision has far-reaching consequences for the redevelopment of older condos, many of which are facing new legal requirements that force them to fully fund maintenance costs via special assessments that many association members cannot afford. There is a growing inventory of these older condos on the market that buyers are avoiding due to the potential for high special assessments. Developers have been eyeing these properties as potential redevelopment sites, but the new ruling introduces significant legal hurdles. Craig Studnicky, co-founder and CEO of ISG World Luxury Real Estate Sales and Marketing firm in Miami notes in a recent video that many big developers in South Florida that were considering redevelopment of distressed older condos lost interest in the opportunity due to the unlikely nature of getting 100% approval from the homeowners for termination of their COAs.

​Key implications of the decision include:

• Increased difficulty for developers: The ruling makes it harder for developers to acquire and redevelop older condo buildings, as unanimous consent for termination is now more likely to be required.

• Impact on financing: Lenders may be more cautious about financing condo redevelopment projects due to increased legal risks.

• Uncertainty for condo owners: While the decision protects existing unit owners, it also creates uncertainty about the future value of their units and the potential for redevelopment.

The case is expected to be appealed to the Florida Supreme Court, and the outcome of that appeal will have a profound impact on the future of condominium redevelopment in Florida.