Article
Courtesy of The Sun Sentinel
By Joe
Kollin
Published June 9,
2008
They are stuck in a kind
of condo limbo.
During the heady days of the real estate boom, condo conversions were a
popular option for buyers seeking affordable properties. But then the
market crashed and many units in the former apartment buildings remained
unsold.
The result: Conversions that were never completed because developers never
turned associations over to the buyers.
Now those buyers are facing "a big problem," said Rosa M. de la
Camara, a Miami-based attorney with Becker & Poliakoff.
"The
developer-controlled board can assess the owners to pay for necessary
repairs but oftentimes don't because they would be assessing themselves
for a great part of the financial burden and, thus, the property is left
to fall into disrepair," de la Camara said.
To get income, developers often rent the unsold units. Some don't set
minimum standards for tenants, resulting in transients with no respect for
those who invested their life savings in their homes.
Geoff Nordwall, 51, rented a one-bedroom apartment in the 264-unit
Mediterranean Village, in Fort Lauderdale. Two years ago, Devco LLC, of
Fort Lauderdale, converted the complex to condos. Because the location was
perfect for his job, Nordwall paid $329,900 for his unit.
When the market crashed, Devco began renting unsold apartments. According
to Broward County records, about 100 units, or 38 percent of the total,
are unsold. Nordwall said many of the 164 sold apartments are in
foreclosure.
"We're stuck," he said. "The developer isn't selling so he
rents when he can and that puts us in a hard position. You're basically
owning in a rental community and we have no say who they rent to."
Under state law, developers must give owners at least one-third of the
seats on a board when 15 percent of units are sold.
Owners at Nordwall's complex did elect one director to the three-member
board, but the developer still controls the association, he said.
He said he pays $247-a-month maintenance and "we can't tell where our
money is going."
Alan Gabriel, the attorney for the developer-run association, said Devco
won't remain in control forever.
"Nobody could predict what the market would do, but in time the
turnover will occur," he said. "The property is being maintained
because they will be looking to sell, which is better than other places
that are falling apart."
According to Sam Farkas, spokesman for the Division of Condominiums,
Timeshares & Mobile Homes, the number of conversions peaked between
July 1, 2005, and June 30, 2006.
The number of those conversions whose associations were turned over to
owners wasn't available.
In Broward, conversions went from 22 in 2003-04, to 106 the following
year, up to 141 in 2005-06, down to 49 in 2006-07, and plummeted to 14 in
the most recent year that ended last week.
In Palm Beach County, it went from 39 in 2003-04, down to 34 the following
year, up to 72 in 2005-06, down to 22 in 2006-07, and fell to only eight
in the most recent year.
De la Camara offers suggestions for unhappy owners.
"While an option ... is to sue the association and developer for
failing to maintain the property, another option is to try to force
transition and take control of operations," she said.
State law allows owners to force a developer to give up control of the
association if the developer quits offering units for sale "in the
ordinary course of business" and, beginning Oct. 1, if a developer
files for bankruptcy.
"These protections were built into the statute ... to help owners who
would otherwise be stuck in a condominium conversion project which could
be controlled by an unscrupulous developer with no desire or ability to
continue an active sales effort, or with no desire to keep the property
properly maintained," she said.
Q.
How can a condo or homeowner association enforce a rule if its documents
don't allow it to fine offenders?
A. Jane F. Bolin, a Davie attorney, said the association
"should file a lawsuit against the owner to enforce the
restrictions."
Depending on the association's documents, the board may be able to seek
attorney's fees. She called fining "a great way" to enforce
rules because it is less expensive than filing suit.
"If you do not have a fine system, consider amending the association
documents to create a fine system," she suggested.
It is one way to uphold your property values and living standards.
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