Buyers sue to recoup Mandarin Oriental deposit on unfinished Boca Raton condo
Alexandra Clough, Palm Beach Post
7 min read
A Highland Beach couple is suing an affiliate of Boca Raton-based Penn Florida Cos. in a bid to recoup their deposit on a unit at the unfinished Mandarin Oriental condominium.
The lawsuit is the first sign that buyers are losing their patience with the years-delayed project, now in its fifth year of on-and-off construction and still nearly 18 months away from being completed.
The Mandarin Oriental Residences is part of the $1.5 billion Via Mizner complex at the northeast corner of Federal Highway and Camino Real in downtown Boca Raton.
At the northeast corner or Camino Real Road and Federal Highway there are three buildings. The northernmost building is the unfinished Mandarin Oriental condo at left. The next building to the south is the unfinished Mandarin Oriental hotel at right. The southernmost one, not pictured, is a completed apartment building. Photographed on July 16, 2024, in Boca Raton, Fla.
The project includes the 101 Via Mizner apartment tower, now built, and two unfinished 12-story towers: the Mandarin Oriental hotel and a separate tower for condominiums. Shops, restaurants and a private club also are planned.
Since the project first was announced in 2015, downtown Boca Raton has boomed with new eateries, apartments and other upscale condominiums.
But some Mandarin Oriental condominium buyers, who have waited years to see their promised luxury residence completed, are fed up.
Couple seeks return of nearly $700,000 in deposits
On July 8, Michael and Elyse Filon filed their Palm Beach County Circuit Court lawsuit against the condo's parent company, Via Mizner III LLC. The entity is led by Mark Gensheimer, president of Penn-Florida Cos., the Mandarin Oriental's developer.
The lawsuit demands the return of a $697,500 deposit on a promised $2.5 million unit.
At the northeast corner or Camino Real Road and Federal Highway there are three buildings. The northernmost building is the unfinished Mandarin Oriental condo. The next building to the south is the unfinished Mandarin Oriental hotel. The southernmost one is a completed apartment building. Photographed on July 16, 2024, in Boca Raton, Fla.
On July 17, the day after a reporter began making phone calls to Penn-Florida executives about the Filon case, a Penn-Florida official said he got on the phone with other company officials to make sure the Filons will receive their money back so their lawsuit can be settled.
Albert Piazza, Penn-Florida's president of development, said efforts already had been underway to return the Filons' money when the lawsuit was filed.
"Everything has been resolved, so there's nothing there," Piazza said. "It was a timing thing. We were processing it. I'm taking care of it, and he will get his money back."
James Ferrara, the Filons' Fort Lauderdale-based attorney, could not immediately be reached for comment to confirm the lawsuit's status. But as of July 17, the lawsuit remained an open case.
In their complaint, the Filons said a 2018 purchase contract no longer is in force because the couple's 10th floor Mandarin Oriental condo was not finished within three years of a November 2020 completion date, as per the agreement.
"As of the date of this complaint, the entire structure of the (condo tower) is still just a few steps beyond a concrete shell," the lawsuit said.
In their complaint, Michael and Eylse Filon included a contract release with the developer that was recently drafted and set to be signed in May. But the lawsuit said Penn-Florida officials "refused" to sign the document and give the couple back their money.
Subsequently, the Filons were told they will not receive their deposit back because the lender must approve the return of their money, the complaint said. The Filons balked at this provision and said it "was never negotiated by the parties."
The Filons aren't the only preconstruction buyers trying to get their deposits back and exit the project. About a half-dozen other condo buyers quietly recouped their deposits this year.
But other buyers haven't had the same luck. These buyers said their recent requests to negotiate the return of their deposits have been met with silence, creating frustration and uncertainty.
Piazza said buyers who want their deposits back will have their requests reviewed "on a case-by-case" basis.
He said he understands that with the project taking years to complete, some buyers are aging and can't wait, while others have had changed circumstances. But those are the minority of the buyers in the 85-unit condo, which is about 90% presold, he said.
"By and large, everybody is patiently staying with the project," Piazza said.
A five-star 'urban oasis' for downtown Boca Raton
In a 2015 announcement, Gensheimer described the project as an "urban oasis" for the downtown. The announcement was a coup for the neighborhood.
Boca Raton boasts only one other luxury hotel, the venerable complex known as The Boca Raton. And a new hotel hasn't opened downtown since 2016, when the mid-market Hyatt Place threw open its doors.
In addition, there are few Mandarin Oriental Residences, with only 12 properties worldwide.
At first, the project's construction moved rapidly, with completion of a 366-unit apartment building in 2016.
But the Mandarin Oriental Hotel and Residences buildings remain an unfinished eyesore, even though construction began in 2019.
Penn-Florida has blamed construction delays on the COVID-19 pandemic and difficulties obtaining materials, even as projects nearby, such as the Alina Residences, were begun and completed during this period.
A 2022 report by The Palm Beach Post revealed another reason for the Mandarin Oriental's delay: a long-running lawsuit between the project's partners that scared off lenders, according to court documents.
At one point in the litigation, Penn-Florida's Gensheimer said the lawsuit had made raising capital to complete the project "a struggle," according to court documents.
The partnership litigation was settled in 2022, contingent on a refinance in mid-2023.
That summer, workers returned to the project after Penn-Florida announced it had closed on a $302.5 million loan, which included the refinance of a $225 million loan made in 2019. The lender is Madison Capital Partners.
In June 2023, David Warne, Penn-Florida's chief operating officer, said construction of the 162-suite hotel and 85-unit condo would wrap up by the end of 2023.
Could 2025 be the year the condo and hotel are completed?
At the northeast corner or Camino Real Road and Federal Highway there are three buildings. The northernmost building, left, is the unfinished Mandarin Oriental condo. The next building to the south, center, is the unfinished Mandarin Oriental hotel. The southernmost one, right, is a completed apartment building. Photographed on July 16, 2024, in Boca Raton, Fla.
That didn't happen, and Piazza said Penn-Florida now has a new completion date: the end of 2025.
The last windows are being installed in the condo tower, so the building will be enclosed and no longer subject to outside elements, he said. Exterior stucco work is about to begin on the condo tower, too, he added.
Meanwhile, the hotel building still has a number of windows yet to be installed, but Piazza said work is underway to finish that job so that tower also can be closed up. He said construction on the hotel tower is a couple of months behind the condo, but he expects the hotel building will catch up.
Piazza said the project has all the financing it needs for completion: "We're in good shape."
He also blamed a "crazy" financial market environment for delays in completing the most recent financing rounds on the large and complex project, but he said that money issues have been worked out.
So have labor increases from subcontractors, he added.
But even though costs have gone up, the value of condos has gone up even more, Piazza added.
As a result, some units from buyers exiting the project will go back on the market for higher prices.
The Mandarin Oriental website lists eight of 85 units still available for sale.
None of them include about a half dozen units recently released from contracts with buyers, according to a source familiar with the building and spoke on condition of anonymity.
Could other buyers sue to recoup deposits, too?
At the northeast corner or Camino Real Road and Federal Highway two buildings are under construction. A cyclist rides past the unfinished Mandarin Oriental condo and the unfinished Mandarin Oriental hotel. Photographed on July 16, 2024, in Boca Raton, Fla.
The Filon lawsuit could open the floodgates to more litigation from other buyers seeking their deposits, said Gary Nagle, a Juno Beach-based real estate attorney.
"There's a cascade effect," said Nagle, who also is the lawyer for the Palm Beach Board of Realtors.
Nagle added Piazza "is correct that everything is on a case-by-case basis, but I think everyone's facts are going to be supportive of a return of deposits."
Nagle handled numerous lawsuits from buyers seeking repayment of their deposits during the real-estate recession in the mid-2000s.
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