A legal dispute between a Palm Beach condominium association and one of its residents has ended in a settlement that will bring in a forensic accountant to review $15 million in special assessment funds. The Halcyon of Palm Beach Condominium Association reached the agreement with Dr. Michael Montanaro, an orthodontist and unit owner, nearly a year after he filed suit over the handling of an air conditioning project and concerns about financial transparency.
Montanaro’s lawsuit, filed last October, alleged that the association had bypassed owners’ rights by approving a $2.5 million air conditioning project without their vote. He also called for a court-appointed receiver to take control of the association’s finances due to questions about how special assessment funds were spent.
Earlier this month, Palm Beach Circuit Court Judge Maxine Cheesman approved appointing a receiver. However, as part of the settlement, the association will instead hire a forensic auditor agreed upon by both parties to examine the spending records related to two assessments raised in 2021—one for $6 million and another for $9 million.
“Having a receiver would be much worse for them than having an accountant, as a receiver is in control of the association,” said Bill Pincus, attorney for Montanaro. “Instead, the association will have a forensic accountant, agreeable to us, look through these books and figure out what happened with this money.”
Court records indicated that previous attempts at accounting for all $15 million had been inadequate. David Glickman, another attorney representing Montanaro, commented on these findings: “The main issue was that the association was simply unable to account for all of the $15 million it spent. Its effort to show what happened to all of that money was insufficient.” He added: “There wasn’t necessarily evidence of nefarious activity,” but noted that it “raises a lot of questions,” given the amount involved.
A spokesperson from the condo association stated they expect to hire an auditor in early September.
The Halcyon complex consists of 104 units across two oceanfront buildings at 3440 South Ocean Boulevard on Palm Beach’s South End. Built in 1980—the same year Montanaro purchased his unit—the property is among several older condos facing new state safety regulations designed for aging structures following recent changes in Florida law (https://www.flsenate.gov/Committees/BillSummaries/2022/html/2893).
As part of settling the case, Halcyon’s board also agreed to pay Montanaro’s $250,000 legal fees and exempt him from any special assessments used toward those fees or related litigation costs. Owners will now have an opportunity to vote on future projects like the air conditioning system.
“My client is very glad,” Pincus said. “I think ecstatic is a proper word.”
Recent months have seen other area condo lawsuits involving construction defects and disputes over developer representations (https://therealdeal.com/miami/2024/02/12/la-clara-condo-board-sues-great-gulf-over-alleged-defects-in-west-palm-beach-tower).
