Buyer of $6M luxury Coral Gables penthouse sues developer Kapoor, claiming ‘fraud’
Developer Rishi Kapoor’s first luxury condominium high-rise project near downtown Coral Gables looked like a picture of success from the outside.
Wealthy buyers flocked to the 39-unit, 13-story building — with a resort-style pool, saunas, weight rooms and other fitness amenities — which appeared to be completed last year.
One of them was Daniel Flores, a Miami businessman who signed a purchase agreement in December 2021 with Kapoor’s development company, 515 Valencia SPE, to acquire a penthouse unit on the 12th floor for $6 million.
But after putting down at least $4 million towards the purchase and upgrades on the penthouse, Flores finds himself unable to complete the transaction and move in because the unit isn’t completed and Kapoor’s signature project at 515 Valencia Ave. is entangled in liens and lawsuits involving lenders, investors and contractors, according to a breach-of-contract suit filed by Flores’ company, Mironest CG LLC.
In the suit, Mironest claims that Kapoor — who was forced out as the CEO of his parent development company, Location Ventures, in July amid scrutiny by local and federal investigators looking into his ties to Miami Mayor Francis Suarez and others — diverted the buyer’s money to his own firm and never completed the interior work on the penthouse.
Mironest claims the unit was supposed to be completed by October 2022, as promised in Flores’ purchase contract.
Mironest also alleges the seller is in “default” on the contract, noting that the penthouse is uninhabitable: A photo included in the suit shows that the unit is a “blank, concrete shell” with “minimal framing.” Legally speaking, Flores’ attorneys say, even if Flores and his family wanted to move into penthouse unit 1202, the city of Coral Gables would be unable to issue a certificate of occupancy.
Nearly two years since Flores signed the purchase contract, “the apartment is nowhere close to finished,” says the suit, filed earlier this month in Miami-Dade Circuit Court. “Construction was stymied to a halt by what [the buyer] now knows to be a massive fraud perpetuated by Mr. Kapoor, 515 Valencia SPE, Location Ventures” and others, including the project’s general contractor, investors and lenders, the lawsuit alleges.
Reached by email Friday, Kapoor rejected the allegations in the lawsuit, saying it is an attempt by buyers Daniel and Rebecca Flores to “throw anything at the wall” to prevent the loss of their penthouse purchase.
Kapoor said the couple took over a year to finalize custom plans for their unit, countering that “these threshold issues and delays fundamentally contributed to the Villa Valencia team ... being unable to [make] progress [on] permitting and the buildout, unlike the successful completion of 36 other units in the building.
“Unfortunately, those delays ran them into the current issues,” he added. “I have no personal involvement in the matter, and I wish the remaining parties could work together for an amicable resolution with a buyer apparently willing to close.”
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Since Kapoor’s departure as Location Ventures’ CEO, his development company has been temporarily taken over by a former Miami-Dade Circuit Court judge, Alan Fine, who was hired by the firm’s board of directors to liquidate assets and pay off creditors. In an interview this week, Fine told the Miami Herald that that there has been a breach of the buyer’s contract to acquire the penthouse unit and that he’s willing to turn over a quit claim deed to Flores transferring ownership to him based on what he has paid so far. Under those terms, however, Flores would have to complete the interior work on the penthouse unit at his own expense, he said.
Fine described Flores’ lawsuit as “an opening salvo to get those liens cleared,” but he added: “We can’t clear those liens for him.”
Jennifer Recine, a lawyer with the New York law firm Kasowitz Benson Torres, which is representing Flores’ company in the suit, said that Fine’s offer on the quit claim deed is hollow because the liens on the condo property as a whole still pose significant barriers to the buyer taking ownership of the penthouse unit.
Recine said that her client rejected Fine’s offer because it doesn’t go nearly far enough to resolve all the legal problems preventing him from attaining ownership of the penthouse and moving into it.
“Location Ventures and 515 Valencia SPE, LLC should be seeking to invalidate liens and claw back monies paid improperly to contractors, other insiders, and even shareholders,” Recine said in a statement provided to the Miami Herald on Friday. “If they did so, they could deliver clean title to Mironest CG, in which case Mironest CG remains fully prepared to step in and fit out the concrete box that is Unit 1202 of Villa Valencia, so its owners can finally move into their home.”
But Recine said that Location Ventures and 515 Valencia SPE “refuse to do so, claiming to now be insolvent despite collecting over $104 million in sales and deposits” from Villa Valencia buyers.
In total, property records show that almost all of the 39 units at Villa Valencia have been sold for $1.5 million to $6 million over the past three years, with closings completed and buyers moving into their units. The exceptions are the two penthouses on the 12th floor, and the single penthouse on the 13th floor. While Flores is trying to acquire his penthouse through a court action, the other two penthouses remain unsold. All three have unfinished interiors.
To complete the interiors of those penthouse units, which promised to deliver substantial profits on the Villa Valencia project, Location Ventures and its development entity, 515 Valencia SPE, borrowed about $2.7 million from a Coral Gables private lender, Robert Gutlohn. They also still owed Gutlohn another $1 million on a prior loan for Villa Valencia.
In recent months, Gutlohn’s lending companies have sued Location Ventures or Kapoor over a series of loans for a handful of luxury condo projects in Miami-Dade County, including Villa Valencia. According to one lawsuit, Gutlohn is seeking to foreclose on the three unsold penthouse units at Villa Valencia to recover the debt on his loans.
Gutlohn also sued Kapoor in a foreclosure action on his $6 million waterfront home in the Cocoplum area of Coral Gables because, Gutlohn says, he has failed to keep up on his mortgage payments.
In the latest suit, Flores’ company, Mironest, accused Kapoor of misappropriating Gutlohn’s loan to complete the interiors of the penthouse units at Villa Valencia. “Instead of using the Gutlohn financing to complete construction of the remaining floors, including [Flores’ unit 1202] defendant Kapoor stole the monies to repay [Location Ventures] stakeholders.”
In addition to Flores’ claim, another Villa Valencia condo buyer, Juan Gronlier, has sued 515 Valencia SPE and Kapoor, accusing the developer of selling his nearly $2 million condo unit on which he had made a down payment of $792,000 to another buyer and then withholding his deposit.
