Real Estate News

Defective Chinese drywall found in luxury Brickell condo

A tower at the 500 Brickell complex. It’s one of two buildings that are part of the 500 Brickell complex. Defective drywall was only found in the east tower.
A tower at the 500 Brickell complex. It’s one of two buildings that are part of the 500 Brickell complex. Defective drywall was only found in the east tower. Miami Herald staff/FILE, 2009

A luxury condo tower in Brickell has found defective Chinese drywall in 29 of its units — and will have to pay $3.3 million to have it removed and replaced.

Defective drywall is strongly associated with the release of foul-smelling sulfurous gases that damage building materials, appliances, pipes and other equipment, according to the federal government.

In a letter to condo owners, the 500 Brickell East condominium association wrote that “evidence of some of these effects have been detected” in the building. The association hired an engineering firm to confirm the presence of the imported drywall through x-ray analysis and laboratory testing.

The discovery could have a chilling effect on prices at the luxury tower on Brickell Avenue, which was built by the Related Group between 2005 and 2008 and contains 321 units.

Units currently listed for sale run from about $300,000 to more than $1 million.

“When buyers hear the term ‘Chinese drywall,’ they run in the opposite direction,” said Michael Light, a broker at Miami Luxury Homes. “With sellers trying to unload their units and buyers staying away, it will cause a low-demand, high-supply situation driving prices down.”

No defective drywall was found in the complex’s second tower, 500 Brickell West.

During the pre-recession construction boom, builders responded to a national shortage of drywall by turning to manufacturers in foreign countries such as China. Some of the imported material turned out to be defective, leading to Congressional action and lawsuits around the country.

The Centers for Disease Control and Infection has said there is currently not enough information to determine if breathing the resulting gases poses a health risk for residents. But Chinese drywall has been linked to short-term side effects including itchy eyes, recurrent headaches and breathing problems.

“Depending on the extent of the problem, the association will have to displace the people living in those units while they remove the drywall,” said Victor Diaz, an attorney based in Miami Beach who has represented hundreds of plaintiffs in lawsuits over drywall. “It’s an extremely complicated process.”

Diaz said many people don’t realize the problems they are seeing in their homes are related to defective drywall.

“They think their televisions or computers are malfunctioning, or that there’s something wrong with the water heater or the air conditioning unit, or that their faucets are defective,” Diaz said. “But it’s all related to these gases.”

The condo association filed a lawsuit last year seeking damages against the contractors who installed the drywall, Facchina McGaughan LLC, and Caceres Drywall Corp.

But in the letter to homeowners, the association said it could not afford to wait for the litigation to be resolved but needed to act now to prevent further price depreciation and physical damage to the units.

The association will meet on June 3 to vote on taking out a line of credit to pay for the replacement of the drywall. If the lawsuit against the contractors fails, the association would have to raise monthly maintenance fees by 25 percent to pay back the loan, it wrote in the letter.

The building sat largely empty during the recession as the the Related Group, one of South Florida’s premier condo developers, desperately tried to sell units, at one point offering a one-year lease of a Mini Cooper to buyers.

Related did not respond to a request for comment. It is not listed as a party in the lawsuit, according to county court records.

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