Florida condos are struggling. Could they be redeveloped?

It’s a tough time to be a condominium owner in Florida.

New standards for building safety coupled with skyrocketing insurance rates have made condo life prohibitively expensive for some.

At properties facing millions of dollars of repairs, owners are contemplating whether their homes are worth saving.

“Termination could become an exit strategy for some buildings that have been poorly maintained for many many years where it’s hard to catch up,” said Juan Farach, a partner at Shubin Law Group who specializes in condo issues.

That process involves selling a majority of units to a developer who dissolves the condo association, tears the building down and builds new.

These deals can be lucrative. But they’re also hard to close.

Florida law requires approval from 80% of owners to terminate a condo association, but just 5% can block it. Many associations have higher thresholds, with some requiring 100% approval.

Investors can try to gain control of the board and loosen those restrictions. But it doesn’t always work out.

That’s what happened at Biscayne 21, a Miami condo tower at the center of a court case that could change how termination deals are handled across the state.

In 2022, developer Two Roads spent about $150 million to buy all but ten of the 191 units. It terminated the association and began securing buyers for a new luxury building planned for the site.

Some of the remaining owners sued, claiming Two Roads violated their voting rights and unlawfully lowered the threshold for termination.

The holdouts won on appeal last year. Florida’s Third District Court of Appeal reaffirmed their victory last month, issuing an opinion denying Two Roads’ request for a rehearing.

Glen Waldman, one of the attorneys representing the minority owners, said the ruling solidifies that everyone in the condo association’s vote matters.

It also leaves the luxury redevelopment stuck in limbo until a resolution is reached.

“Two Roads is in a terrible, terrible position,” Waldman said. “Either they have to put our building back together again like Humpty Dumpty or they have to pay a tremendous amount of money in damages or resolutions.”

Taylor Collins, managing partner and cofounder of Two Roads, said he hopes the Florida Supreme Court will take up the matter.

“This case has broad, statewide implications, and we believe it deserves to be heard by the highest court in the state,” he said in a statement.

In the months leading up to the July decision, industry experts speculated on how the outcome might put a damper on future termination deals. The Related Group, Fortune International Equity, and several other developers engaged in termination deals submitted a brief to the court supporting Two Roads.

“This Court’s Opinion injects uncertainty and thus an obstacle for the Developers that threatens to stifle current and future redevelopment in this State,” they wrote.

But rather than making sweeping statements about termination in general, Farach said the judge’s revised opinion was more narrowly focused on the specifics of Biscayne 21’sdeclaration.

“We view it as a very narrow ruling that really only applied to this condominium,” he said.

Similar cases have played out across the state to varying degrees of success.

In Tampa, a group of owners at the Grande Oasis sued the condo board and an investor called West Shore investor that has taken over a majority of units there.

They tried to argue that the association’s bylaws were changed unlawfully to pave the way for termination. They lost.

West Shore has not announced plans to terminate the condo. The company declined to comment for this story.

But condo owner Doreen Roselli, who organized the lawsuit, said West Shore now has the numbers to force termination, which could leave her with no choice but to sell.

She said West Shore is putting increasing pressure on the holdouts.

“They said sell now and you’ll get this much. If you wait you’re going to get crap,” she said. “I’ve been looking around at other places but there ain’t no way I can afford to stay anywhere near here.”

State Rep. Vicki Lopez, R-Miami, has sponsored several condo bills. Biscayne 21 is in her district.

She said the case has been frustrating to watch because the majority of owners wanted the condo to be terminated. That’s why they sold to Two Roads.

“Lets not allow the narrative of developers are coming in and throwing us out of our buildings,” she said. “They’re buying units that condo owners want to get rid of.”

She wants to introduce legislation next year that would clarify the statues for condo termination and hopefully cut down on litigation.

Regardless of what happens, condo terminations aren’t going away. Though the Biscayne 21 case has created some uncertainty, developers across the state continue to scout out potential deals. Even Two Roads.

“We are actively pursuing new opportunities and evaluating projects as we always have,” Collins said.