Some converted condo owners powerless

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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