Real Estate News

Their condos were missing a room — so they’re suing real estate giant Related Group

Aerial view of Paraiso District, the massive Edgewater project by The Related Group comprised of four condo towers.
Aerial view of Paraiso District, the massive Edgewater project by The Related Group comprised of four condo towers. THE RELATED GROUP

The biggest real estate developer in Miami-Dade has been accused of stiffing customers who bought condominiums marketed as “one bedroom + den” in size — but the den never showed up.

In a lawsuit filed in Miami-Dade circuit court late last month, 12 plaintiffs charge The Related Group with breach of contract, fraud and conspiracy for misleading them into buying condo units at the Paraiso Bayviews tower at 501 NE 31 Street in Miami.

A representative from Related said the company has done no wrong and delivered the units exactly as sold.

The lawsuit claims the floor plans used in marketing materials and final sales contracts for the “Residence 02 and 04” and “Residence 03 and 05” units in the building had an interior space of 750 square feet, including a clearly defined “den.”

But when the units were delivered, the buyers discovered the den areas did not exist. The square footage of the final units range from 610-622 square feet.

The square footage of final units is always smaller than the footage promised in floor plans, because the schematics measure space including the exterior of the walls.

According to the lawsuit, though, this shortfall goes beyond the usual.

“The developer delivered three quarters of what the owners paid for,” said Steve I. Silverman, a partner at Kluger, Kaplan, Silverman, Katzen & Levine law firm, who is representing the plaintiffs. “It’s like going to McDonald’s and paying for a Happy Meal but not getting any French fries.”

The 10 units were sold for prices ranging from $403,000-$495,000. All the contracts closed between July 17 and September 24 of 2018.

Silverman said the lawsuit was filed now, before the one-year statute of limitations ran out, but that he expects more plaintiffs who bought units in the building to join the legal action.

Pre-construction sales contracts typically allow room for developers to make changes to the property during the building process, which often leads to lawsuits once the final product is delivered. Features including counter -top finishes, appliance brands and the percentage of water views are all fair game for those lawsuits, according to Jason Kellogg, a partner at the Levine Kellogg Lehman Schneider & Grossman law firm.

“In almost every instance, the complaint is about a difference between what was marketed and what was actually built,” said Kellogg, who is not involved in the lawsuit. “Developers put all kinds of disclaimers into their contracts, because they need the financial flexibility to change the original plans to save on construction costs or bring a project in on budget. But they often go too far.”

floorplan1.jpg.jpg
One of the floor plans for a “one bedroom + den” unit at Paraiso Bayviews in Edgewater. A lawsuit claims the den disappeared from the finished condos.

The lawsuit argues that PRH Paraiso — the LLC used by Related to develop the project — violated an exit clause in the purchase agreement requiring them to notify the buyers in writing that it had “materially altered or modified” the unit under contract. Such a warning would have allowed the buyers to cancel their contract and recoup their down payment.

The den areas account for between 15 to 17 percent of the total square footage of the units, depending on the layout.

Silverman said none of the plaintiffs received any such notice from Related.

“Many of the buyers in that development are foreign buyers, and many of them closed through agents or without inspections,” Silverman said. “They paid for a one bedroom plus den. Their contract obligated the developer, if there was a material change in the unit, to provide written notice to the buyers.”

denphoto.jpg
A photo of the supposed den space in one of the Paraiso Bayviews condos.

But Andrew C. Hall, a partner at Hall, Lamb, Hall & Leto law firm, said the case isn’t that clear-cut.

“What makes this case a little unusual is the size of the den area in question,” said Hall, a veteran of the Watergate and U.S.S. Cole trials, who is not involved in the lawsuit. “These are very small units, so the den is important because it’s big enough for a sleeping space for two people. It’s a failure to live in accordance with a plan that should have been identified before closing.

“But the buyers have the option to do a walk-through and final inspection before closing on the unit,” he said. “You always do the walk-through because you want to make sure you’re getting what you paid for. It’s critical. Those will be the two central features of this trial: The failure of notice and why this wasn’t picked up in the walk-through.”

In a statement, Carlos Rosso, President of The Related Group’s Condominium Development Division, insisted the company has done nothing wrong.

“The units were all delivered as sold. Each buyer received all the required documents, inspected their units, and chose to close,” he said. “Now , nearly a year after closing on their unit purchases, the buyers raise this issue at the apparent prompting of a law firm looking to drum up a dispute.”

Paraiso Bayviews is one of four condo towers built by Related in Edgewater. The buildings, which form the Paraiso District, feature more than 1,300 condo units and seven stand-alone town homes, ranging in price from $350,000 to more than $7 million.

Combined, the massive project covers nearly 4 million gross square feet of waterfront property, a public park, boat slips, pools and tennis courts. Construction on the development was completed in 2019. The towers are 97 percent sold.

The City of Miami has changed dramatically since its genesis and the rising prices along with new sprawling skyscrapers are the evidence.

Rene Rodriguez has worked at the Miami Herald in a variety of roles since 1989. He currently writes for the business desk covering real estate and the city’s affordability crisis.
  Comments