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Foul play in multifamily? Southstar accuses Hines of offloading property with serious hidden defects

Property was condemned and residents were evacuated

Southstar Capital Group filed a suit against developer Hines for pulling the wool over its eyes in the $67 million sale of a 306-unit luxury apartment complex near Disney World.

According to Southstar, Hines willfully hid crippling defects on the Aviva at Celebration complex. Southstar said that it bought the newly built property from Hines in 2016 and found that it was so riddled with hidden defects that it was eventually condemned and its residents were forced to evacuate.

“Hines knew from the beginning that this property was fraught with construction defects and structural issues yet went ahead and sold us the complex for market price,’’ Southstar Capital Group President and Chief Financial Officer Gina Williams said in a statement. “Hines needs to resolve this now before the property falls into further disrepair and the damage becomes even more costly.’’

According to Southstar, the damage did not become readily apparent until after the sale when the walls, breezeways, floors and balconies began to crack and deflect. This prompted subsequent inspections, and after removing layers of the walls and floors, Southstar said that it found construction defects that violated local building codes.

As a result, all residents were forced to evacuate the building in August 2017, Southstar claims.

According to Southstar, Hines, through its wholly-owned affiliate, Urban Oaks Builders, the general contractor on the project, signed a contract to make repairs on the property, but as the hidden defects came to light, Southstar says Hines refused to continue repairing the building.

In response, Southstar filed a lawsuit, and recently put the snake-bit property up for sale.

“Having this once beautiful property sit and rot serves no one’s interests. Every day that goes by, the water and mold damage in the buildings is getting worse,’’ Williams said. “For a global developer like Hines to simply walk away from a community is irresponsible and inexcusable.’’

HousingWire attempted to contact Hines for a response to Southstar's claims, but as of publication, the company has not yet responded. This article will be update should the company respond.

3d rendering of a row of luxury townhouses along a street

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