|
|
 |
|
September 2, 2010 |
|
|
|
|
| |
|
|
| October 23, 2007 |
By: Polyana da Costa |
|
subsidiary of Miami-based developer Merco Group has been slapped with a $30 million foreclosure suit after allegedly skipping payments since June on the unbuilt Palladio Terrace condo project in West Palm Beach.
The developer has for months rebuffed efforts by would-be unit buyers to get refunds on deposits totaling millions of dollars for condos at the project that shows no signs of construction any time soon.
Eastern Financial Florida Credit Union filed the foreclosure suit Friday in Palm Beach Circuit Court against Merco Group of the Palm Beaches on a loan that was recorded last October.
The developer planned to build 338 condominium units on the 4.5-acre site at 2211 N. Flagler Drive overlooking Currie Park and the Intracoastal Waterway.
But Merco principal Homero Meruelo said the $300 million project never broke ground due to insufficient preconstruction sales. He said he was unaware of the lawsuit when contacted Monday.
“We put the project on hold because of the lack of presales,” Meruelo said. “I understand we were negotiating an extension with our lender, but I am not aware of the foreclosure.”
Meruelo acknowledged financial trouble on the project.
“Of course, the company that owns the Palm Beach land is going through financial difficulties,” he said. “What other real estate development company isn’t in today’s market?”
But he said the foreclosure suit does not change plans for the project, which offered units from about $350,000 to $4 million.
“We’ll deal with it,” Meruelo said. “We’ll check with our in-house accounting, and we’ll deal with it.”
Eastern Financial Florida claims Merco defaulted on the mortgage in June and wants the $30 million to be paid in full by a date to be determined by the court. The case was assigned to Circuit Judge Jeffrey Colbath.
The Miramar-based credit union is asking the court to approve the sale of the property to satisfy the mortgage, according to the complaint.
Merco bought the land with a $23.4 million loan from City National Bank of Florida in March 2004. Eastern Financial Florida refinanced the loan and lent the developer another $6.6 million in May 2006.
Merco paid about $6.7 million per acre for the site.
It wasn’t uncommon for developers counting on big profits to overpay for land during South Florida’s condo boom.
When asked if he paid too much, Meruelo said, “At that time, it was a good deal. Today, who knows?”
Merco Group of the Palm Beaches also is involved in other lawsuits related to the Palladio. Since the project was “put on hold” in January, buyers have being suing to recover their deposits.
Some contract holders were told by Merco Group that the company has the right to keep deposits used in the planning of the development even though the project was never built, some of the lawsuits say.
“Some of them have gotten their deposits back,” Meruelo said. “Others are waiting.”
Eastern Financial Florida attorney Moises Grayson of Blaxberg Grayson Kukoff & Strauss in Miami declined to comment on the foreclosure.
Merco Group has been an active South Florida developer for years. The company built the 48-story Akoya condo tower at 6701 Collins Ave. in Miami Beach.
Construction has started on the 16-story NoBe Bay condo project on Biscayne Bay at 6700 Indian Creek Drive in Miami Beach and Terzetto at Aventura, a condo, loft and villa development at 2805 NE 185th St.
Merco also ran into trouble at its Deauville condo-hotel in Miami Beach. The company has agreed to settle a class action lawsuit by allowing about 90 contract holders to buy at prices set in their contracts in 2004 and 2005. Merco tried to return deposits and call off sales.
Merco is awaiting an appeals court decision on its proposed Brisas Del Rio condo project on the Miami River in Miami, but the 3rd District Court of Appeal found flaws with city approval of two other condo projects on the river.
Polyana da Costa can be reached at pdacosta@alm.com or at (305) 347-6657.
|
Search the archive for more stories.
|
|
|
 |
|
lawjobs Featured Ad
Associate
Dynamic, multi-practice law firm seeks associate with 1-2 years exp. for litigation in workers' comp. department; excellent salary and benefits.
Please fax resume to
(954) 938-7902 |
|
|
|
|
|
|
