Privé Group was on the verge of closing on a coveted 1-acre redevelopment site along Singer Island’s waterfront when the deal hit a road block.
The Miami-based developer agreed to pay $12.8 million for the property containing a 13-unit co-op known as Condado, and it expected that purchase would be recorded in a single deed.
But six days before the deal was set to close, the seller demanded the purchase be restructured, a move that would make Privé liable for taxes, according to a lawsuit the developer filed Oct. 19.
The litigation underscores the value of South Florida waterfront properties — and the luxury condos built on them — that are increasingly hard for developers to snag. Luxury condo units in new buildings on the Riviera Beach island are listed for up to $7 million.
Assuming the deal goes through, Privé, led by CEO Javier Rabinovich, plans on raising 13 new condo units at 5060 North Ocean Drive, attorney Robert Stok of StokLaw said. The opportunity to develop was a significant part of Privé’s interest in the property, court documents say, and marketing for the site listed it as prime for redevelopment.
The developer’s lawsuit claims the co-op’s seller, an entity known as Condado, Inc. of Singer Island, had originally agreed to sell in a single closing, before seeking for the deal to be split.
Under the original plan, Condado’s residents, who own shares in a company that owns the building, would return their shares to the company before the sale. That would allow the co-op itself to terminate, so Privé could purchase the land without purchasing the co-op’s company.
The closing was set for Oct. 19, according to court records.
On Oct. 13, an attorney handling the sale on behalf of the co-op seller flagged that it couldn’t go through with the deal unless Privé paid out individual unit owners in 13 closing statements.
“We have a serious problem here that I didn’t think about yesterday,” the attorney, Cathleen Ward of Lippes Mathias, said in an email recorded in court records. “From a tax perspective, we can’t have the shareholder contribute their interest to the corporation, then do a global termination.”
The parties needed to “stick with what I proposed initially,” she added, a plan that included separate closing statements and payments to individual owners.
That plan would allow the seller to avoid a tax, while transferring the burden of the tax to the buyer, court documents say.
Privé had never before heard of that suggestion, Stok responded in a letter to Ward, adding that contract documents didn’t support the seller’s plan, either.
The seller was still ready to close Oct. 19, Ward said in a subsequent letter. But the buyer hadn’t done its part in writing a closing statement, she said. Plus, the seller still required the sale be done through 13 purchases, either of the owners’ shares or of their leases.
The sale has since stalled. Privé filed its lawsuit alleging breach of contract on the day the deal was set to close.
Ward declined to comment on the litigation. She is also a West Palm Beach city commissioner.
The existing Condado units were built in 1966, according to property records.
They’re neighbored on either side by condo buildings: the 40-unit Ocean’s Edge building at 5050 North Ocean Drive, where units are listed for about $3 million, and the Sea Winds towers at 5070-80 North Ocean Drive, where units have asking prices of $600,000 to $1.2 million.
Two other Singer Island condos, the Amrit Ocean Resort and the Palm Beach Marriott Singer Island, are locked in litigation over their hotel-condo structure.
Privé proposed a six-story office building in unincorporated Miami-Dade County earlier this year. The group last year sued South American investors for $20 million in damages for allegedly attempting a hostile takeover of its projects.
Read more
Inside litigation surrounding Amrit Ocean Resort condo-hotel
Inside the decade-long legal clash between owners, developer of a Singer Island hotel-condo
Prive sues South American partners for more than $20M in damages
