Buyers Sue To Get Their Deposits Back At Long-Delayed Mandarin Oriental

Construction of the 86 condos and 164 hotel rooms at the Mandarin Oriental Hotel & Residences, Boca Raton was originally scheduled to be complete in 2020. 

Four years past its original delivery date, the project remains an unfinished shell, with developer Penn-Florida Cos. promising to finish construction by the end of next year. But some of its hopeful residents are tired of waiting. 

Three buyers filed lawsuits this month demanding the return of their six- and seven-figure deposits. The civil suits say local developer Penn-Florida is refusing to return the cash despite missing a contractually defined delivery deadline. 

“My clients are not looking for a discount or anything like that. They're just looking for their deposit back and the interest on the deposit,” James Ferrara, a partner with Hinshaw & Culbertson representing the plaintiffs in three lawsuits, said in an interview. “They want to move on with their lives.”

The developer argues that pandemic-era delays and the terms of the contract give it the right to extend the promised completion date. As a result, it is in no rush to return deposits to Ferrara’s clients. 

“We want our buyers to be happy,” Robert Sweetapple, the attorney representing Penn-Florida, said Friday. “I want to sit down with [Ferrara] and his buyers and see if they really don't want to be part of this and see if there’s something we can do to make them happy.” 

Sweetapple said the disgruntled buyers are looking to air their grievances publicly in an attempt to strong-arm the developer into returning the deposits rather than pursuing a trial.

He said he has yet to be served with the three lawsuits, which would mark the start of the legal proceedings. Once received, Penn-Florida plans to examine each case on its merits, as it has done with other buyers who have privately raised complaints. 

“My client will deal on a case-by-case basis and not litigate the case in the press,” Sweetapple said. “We’ll litigate it in court if they decide to actually serve it.” 

Ferrara disputed the characterization, telling Bisnow Friday that Sweetapple accepted service of the three suits on Thursday. Sweetapple didn't immediately respond to a follow-up inquiry. 

The suits were filed in Florida’s 15th Judicial Circuit for Palm Beach County and name Via Mizner III LLC, the Penn-Florida entity that owns the property, as the defendant. 

The plaintiffs in the cases are Frank and Nancy Scala, Robert and Brenda Needleman, and Blaire Properties LLC, which has two units under contract. They are seeking the return of deposits ranging from $705K to $1.8M that were paid between 2019 and June 2021, depending on the case. 

When the owners signed purchase agreements, the contracts included a promise to deliver the condos by a certain date — the actual timing differs depending on when the contract was signed — but it also included language allowing for up to three years of delays due to unforeseen circumstances, known as force majeure clauses.

The legal dispute centers on whether or not the promised delivery date has passed, even when accounting for the force majeure extension.

“While we cannot comment on pending litigation, we can confirm that we have and will continue to honor the terms of all purchase agreements and will take any action necessary to protect our rights and safeguard the integrity of the project,” a spokesperson for Penn-Florida said in an emailed statement.

The Mandarin Oriental Hotel & Residences, Boca Raton was first announced in 2015 with a planned delivery in 2017. New York-based Madison Realty Capital provided a $225M loan for the project’s construction in 2019, with Penn-Florida predicting the condo-hotel would be completed within two years. 

In August 2023, Madison Realty Capital provided an additional $55M to finish the project, which the developer now says will be delivered by the end of 2025. Florida law allows for buyer deposits that exceed 10% of the condo’s purchase price to be used for the project’s construction. 

“Construction continues to progress, and though the project has been subject to a variety of outside influences since COVID, we remain committed to delivering one of the finest urban resorts in America,” Penn-Florida said in the statement.

The developer said it understands that “circumstances may change for a small percentage of residents” and that it would “endeavor to be as flexible as possible in accommodating their needs.” 

Mandarin Oriental didn’t respond to Bisnow’s request for comment.

Ferrara filed two other lawsuits in July for condo owners looking to get their deposits back. Those cases were voluntarily dismissed, which signals that a settlement was reached, but Ferrara said he was prohibited from disclosing the outcome.

Since he began filing suits against Penn-Florida, Ferrara said he has received calls from at least 10 other disgruntled buyers.

Penn-Florida and Sweetapple said the expansive project’s world-class design and materials meant that pandemic-era supply shortages hit the building’s construction timeline harder than if the property were smaller and built at a lower price point. A spokesperson said the project still contends with supply chain issues.

The property is a shell awaiting stucco and glass installation before interior construction can commence. Sweetapple said unit owners will become less concerned about the delays as the project nears completion.

“I expect what will happen, in some if not all the cases, is that when this project approaches final completion, the excitement and the uniqueness is going to remind the buyers why they wanted to close,” Sweetapple said. 

While Penn-Florida and Sweetapple work to assuage buyer concerns and buy more time, Ferrara said his clients are out of patience.

“Regardless of where this is litigated, whether it's at the courthouse or in the newspaper, my clients are entitled to their money back,” he said.