Bed Bug Infestation At West Palm Beach Apartments Is Nasty Surprise For Buyer, Lawsuit Says

PalmBeachPost.com
Thursday, December 22, 2011

WEST PALM BEACH - A Miami-based real estate investor is suing over a pesky problem at a recently purchased West Palm Beach apartment complex - bedbugs.

According to a lawyer who filed the Nov. 23 lawsuit in Palm Beach County Circuit Court, about 25 percent of the units at the Palo Verde apartments off Forest Hill Boulevard were infested with the blood-sucking parasites at the time of the January purchase.

Attorney Robert Stok, who is representing Palo Verde Investors, a subsidiary of the Aztec Group, Inc., said the units were badly overrun.

"The property manager said it looked like a war zone with blood spots everywhere," said Stok, who added that the apartments have since been rendered bedbug free. "The exterminator said it was the worst infestation they'd ever seen."

Palo Verde Investors purchased the note to the apartments for $11.25 million while the complex off Forest Hill Boulevard was going through a foreclosure, Stok said.

Built in 1973, it had extensive renovations completed in 2005 and 2006, according to a news release written after the acquisition. Investors expected "both higher occupancy and growth in rental income" from the 276-unit complex, the release says.

Instead, they were blindsided by bedbugs, according to the lawsuit filed against Nationwide Life Insurance Company.

Nationwide, an Ohio-based organization, has an affiliated investment group that deals in real estate. Palm Beach County Clerk of Court records show that Nationwide won a final foreclosure judgment against Palo Verde's former owner, Fairfield Forest Hill Garden, LLC, in September 2010.

Nationwide spokesman Dace Dalaforet said his company just learned of the lawsuit and couldn't comment.

Specific charges in the suit include fraudulent and negligent misrepresentation, breach of fiduciary duty, constructive fraud and violation of the Florida Deceptive and Unfair Trade Practices Act.

The complaint claims that Nationwide and its property manager knew about the bedbug infestation before the sale but hid it from Palo Verde Investors.

"We asked for maintenance records, and they didn't supply anything that mentioned bedbugs," Stok said.

Stok said it cost his client more than $63,000 to get rid of the bugs. One treatment, which was used at the apartments, is to heat rooms to up to 120-degrees.

"It's very expensive," Stok said. "We don't want out of the sale, and we're not trying to renegotiate the deal, but we want damages."

There was also the added frustration of moving tenants into new apartments, the loss of rental income during treatment, and costs for painting and cleaning the units.

Bedbugs bite mostly at night, leaving itchy mosquito-like welts. Once mostly non-existent in the United States, they have reappeared because people are more mobile, international travel has increased and there is less knowledge about how to exterminate them, according to the Centers for Disease Control and Prevention.

They're also easy to accidentally bring home. People can pick up the flat insects, which can grow to a quarter of an inch long as adults, from plane and movie theater seats and hotel beds.

"There was due diligence on our part but you can't expect us to go through every apartment with a microscope and slides," Stok said about inspecting the Palo Verde complex. "The tenants said it was a problem before. It's not something that just happened overnight."