Court decision worries developers interested in aging apartment buildings in Florida

Three years after a Florida apartment building collapsed that killed 98 people, new regulations have sent apartment living costs skyrocketing. As costs rise, residents of many aging buildings are selling them to developers who are racing to replace them with new, luxury towers.

In Miami’s Edgewater neighborhood, many older buildings have been torn down and replaced with new, shiny apartment towers. But in the neighborhood’s prime waterfront spot is an older building that’s now vacant.

Jacqueline Fraga says, “They’ve taken out a lot of the windows and doors, if you can see the floors upstairs.” Fraga owns one of the currently empty units in the Biscayne 21 condominium. All but a few units in the 192-unit building have been bought by a developer who wants to tear them down and build a larger, more luxurious building in their place.

Fraga is part of a group of condo owners who sued the developer just before demolition began. The 13-story structure, overlooking the clear blue waters of Biscayne Bay and Miami Beach, has a stunning view. Fraga laughs, saying, “Why do you think they want it so badly?”

Jacqueline Fraga is one of ten apartment owners who refused to sell their apartments to Two Roads Development

Over the past two decades, waves of apartment construction have reshaped Miami. The once-sleepy downtown is now awash with apartment buildings, thriving restaurants and shopping complexes. With most of the waterfront lots already built on, developers are targeting older buildings, especially those in prime locations.

Fraga says she started getting calls a few years ago from real estate agents asking if she wanted to sell. She says her answer was always the same. “I’m not interested in selling. I said, ‘I came to this building in my wedding dress, and I’m going to retire in this building.’”

Under pressure from real estate agents, other owners sold. Two Roads Development eventually acquired all but 10 units in the building. It took over the condo association’s board, voted to change the governing documents, and authorized the completion of construction, allowing it to be demolished.

Many older Florida condominiums, including Biscayne 21, require the consent of 100 percent of the building’s unit owners to terminate the lease. Lowering that number to 80 percent, a Florida appellate court ruled that the developer had violated the unit owners’ voting rights and that terminating the condominium agreement was illegal.

The ruling has broad implications for developers who are considering older apartments for new developments. Attorney Susan Raffanello, who represents Two Roads Development, says, “From my client’s perspective, and other developers in Florida, they are really stepping back and evaluating whether to continue to redevelop properties when these older, run-down apartment buildings come to them.”

Florida’s legislation after the Champlain Towers collapse in 2021 helped developers buy up and replace older apartment buildings. The new rules have increased costs for residents of many older buildings, sometimes requiring significant special assessments that can be cost-prohibitive.

Glen Waldman, an attorney representing Fraga and other property owners, said that wasn’t the case with Biscayne 21, which was built in 1964. “It’s not one of those buildings, even though it’s older, that had life-safety issues. It’s a solid, solid building. It passed all the required tests and would still do so.”

Lawyers for the developer are asking the appellate court to review the case and plan to take it to the state Supreme Court if necessary. Raffanello said the ruling, if upheld, would make it much harder to replace older apartment buildings. “It gives one person control over the entire community,” he said. “And that’s not something any developer wants to get into.”

Condo regulation is an issue that Florida lawmakers have delved into before and will likely come up again next year. Republican Rep. Vicki Lopez, whose district includes Biscayne 21, thinks the state should make it easier for developers to replace older condos.

He has 667 condo associations in his borough and says he understands the dilemma that rising costs pose for many owners. “If you’ve lived in a building for a long time and you happen to be in a building that’s on a beautiful lot, you don’t want to move. But the building is 60 years old, for God’s sake,” he says. “We’re getting to the point now where you’re like, is it even worth living in a condo anymore?”

The Biscayne 21 case casts more uncertainty on the Florida condo market, where three-quarters of the buildings are more than 30 years old. Concerns about new state regulations and the rising cost of condo living have slowed sales across the state and even led to lower prices.