Miami condominium developer Harvey Hernandez cleared a cloud from his BrickellHouse project this week by paying in full a lienholder who had filed a foreclosure suit in October on a $15.8 million loan due in the summer of 2016.
The lienholder, JBG Development LLC, which is controlled by Jose Baboun, voluntarily dismissed a foreclosure action it had filed Oct. 4 in Miami-Dade Circuit Court upon receiving $17 million plus attorneys’ fees, according to JBG’s lawyer, Carlos A. Marin.
“We obtained a loan from an institution” and paid off the lienholder, said Hernandez, chairman and managing director of Newgard Development Group. “What we want to transmit to our buyers and our brokers and the business community is we see it as business as usual. Due to our financial success and our strength and our commitment to the project, we in essence paid a loan three years ahead of schedule just, because we don’t like confusion.”
According to Hernandez, the 374-unit project is “99 percent sold” and construction has reached the 40th floor of the 46-story tower. Hernandez said the building is set to top-off next month — several months ahead of schedule — and is expected to be completed in the summer of 2014.
“They paid us off in full,” Marin said.
The suit, filed against Hernandez, his business partner Jesus Quintero, and BrickellHouse Holding LLC, the company formed to develop the project, pertained to a $15.8 million loan that wasn’t due for three years.
The dispute between Hernandez’s Newgard Development Group and JBG Development, which sold the land at 1300 Brickell Bay Drive to BrickellHouse Holding LLC in August 2012, erupted as Newgard sought to subordinate that lien in order to obtain a construction loan.
In its suit, JBG acknowledged that the loan agreement specified it had to subordinate its lien under certain circumstances, but it argued that Newgard hadn’t met those conditions and was in violation of non-monetary terms of the loan. JBG said BrickellHouse pressured Baboun to accept a subordination that was disadvantageous and in violation of the loan agreement.
The suit also sought an accounting of the books and records at BrickellHouse “to determine if net sales proceeds have been properly allocated, whether BrickellHouse has paid money to parties in contravention of the note.”
The Baboun family was involved with the Brickell Bay Drive site for years. Kenneth Baboun, Jose’s son, worked with Hernandez on the BrickellHouse project during its early phases but left last year.
During the last building boom, the Babouns tried to develop the site themselves. However, in February 2006, Kenneth Baboun, president of BBB Group, announced he was abandoning the project and returned all the deposits to the unit buyers.
The foreclosure action was the first to be filed during the current condominium cycle but caused few ripples.
Alicia Cervera Lamadrid, managing director of Cervera Real Estate, which is in charge of marketing the BrickellHouse project, said the litigation proved to be a non-event among unit buyers. “It was not an issue,” Cervera Lamadrid said. “Nobody held up a payment. Nobody tried to cancel.”