1533 Drexel Avenue in Miami Beach (Apartments.com, City of Miami Beach Planning Department)
A real estate investor plans to drastically cut the price of an apartment building in Miami Beach, claiming it signed an inflated sales contract after being deceived into believing the building could be rented through Airbnb and VRBO.
Through a subsidiary, Raz Ofer sued sellers Alfredo and Regina Arias, claiming they knowingly misrepresented that their 1533 Drexel Avenue building had a short-term rental license.
Ofer said he wanted the price cut from the $ 3.3 million they agreed to for the two-story building under a 2019 contract to about $ 500,000. Ofer, who had deposited $ 50,000 on bail, filed a lis pending claim on the property that could prevent the Ariases’ hands from selling it to someone else.
The lawsuit filed in Miami-Dade Circuit Court on Wednesday sheds light on the value of short-term apartment rentals and how local government crackdowns on Airbnbs and VRBOs are affecting the market and business.
“A building with a hotel license is worth two and a half times as much as a similar building without a license,” says Ofer. That is because the rental income is higher. “I have a licensed apartment building on Pennsylvania Avenue and I’m paid $ 700 a night per apartment today.”
The price reduction he is aiming for corresponds to what Ofer would cost to obtain a license, he said.
Whether he gets permission is a matter of dispute.
To cut short-term rentals in residential areas of South Beach, the city has banned them in certain areas. According to Yisel Morales, a Miami Beach planning assistant, the 18-unit property in Drexel is in a section where these rentals are totally prohibited and no exceptions are allowed.
Ofer’s lawyer David Winker countered that the ban was not set in stone and could be lifted by a city-wide referendum. Ultimately, the Ariases hoped to sell this property to an “unsuspecting buyer” on the pretext that it had the permit, Winker said.
Michelle Marie Urbistondo, an Ariases attorney, said the couple had not deliberately misrepresented that the building is licensed and that it is beyond their control as to whether or not it ultimately gets a permit.
Ofers “aim is to get this property for pennies on the dollar and to make my client strong to sell it to them for less than the agreed price,” said Urbistondo.
The elderly couple Ariases found out about the missing driver’s license about a day after signing the contract and immediately inquired with the city, she said. Nevertheless, it is also Ofer’s job to check whether the property has a permit, said Urbistondo.
The Ariasen have owned the property, which sits on 0.2 acres, for 30 years after buying it for $ 350,000 in 1991, property records show.
It’s one of the many low-rise apartment buildings in South Beach that has been the first choice for years for those who want to enjoy the beach lifestyle and still live a few blocks west of the iconic, noisy tourist streets of Ocean Drive and Collins Avenue.
Ofer first sued Ariases in April over the same matter, but that lawsuit was fraught with technical issues. A judge at a hearing on Wednesday – which preceded the filing of the new lawsuit – agreed to Urbistondo that the April complaint was improperly served on the Ariases, despite no official warrant being presented.
Winker, who represents Ofer in the new lawsuit and was not involved in the April case, lists breach of contract, concrete performance and fraud in the credits.
This isn’t the first time Ofer has been sued over a property he has signed in South Beach. In 2016, an Ofer subsidiary sued the owners of the building at 702 13th Street, alleging the sellers failed to resolve discrepancies in financial records. This case was settled in June 2016.
Contact Lidia Dinkova
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