Courtesy of The Orlando Sentinel
April 3, 2014
When Jon Brandt bought two condos at The Element in MetroWest five years ago, the last thing he said he expected was to be forced to sell them to investors intent on turning them into apartments.
Even as the Legislature is considering reforming an eight-year old "condominium termination" law, owners such as Brandt say they fear a "corporate takeover" by bulk buyers who own at least 80 percent of a complex's units and have the opportunity to control all of them under current state law.
The condominium termination law, as its called, lets developers take title to condos when only 20 percent of the units are in the hands of owners.
|"The corporate attraction is that they're able to pick up condos that are undervalued and they can buy them in bulk and use the existing state law to force owners to sell when they don't want to sell," said Brandt. He used legal channels to fight off a termination by a previous ownership group at The Element.
In addition to The Element, other Orlando-area condominiums where bulk owners control at least 80 percent of units include Manor Row at Park Central, Sage at Winter Park, Paramount at Lake
Eola, Villages at Lake Pointe, and the Residences of Veranda Park, according to an Orlando Sentinel analysis of property records. For condo owners, detecting that a complex is poised to convert to apartments can be tricky when one ownership group holds units under different company names.
Winter Springs condo owner Shirley Lofgren, 85, expects to be forced out of her home under a Florida law that allows developers to strip owners of their homes.
Off Aloma Avenue near Full Sail University, Dorothy Parr is the only individual owner of a condo in a small complex called Sage at Winter Park. She said she was unaware of state condo laws and feels fortunate that the project's developer, Ian McCook of Nvision Group, has been responsible in leasing out the remaining condos there. Whether McCook stays in the picture, though, is uncertain. About a year ago, Parr said, a buyer from China had been interested in purchasing the entire Sage property; that deal fell through.
Up until 2007, all the owners in a condominium project had to agree to terminate their ownership. Legislators then dropped the voting threshold to just 80 percent of condo owners in an effort to allow the redevelopment of blighted or damaged complexes. Since then, 11,825 condominium units have converted to apartments. More than 2,600 of those were in Orange, Seminole, Osceola and Lake counties.
At the Serenity at Tuskawilla condominiums in Winter Springs, bulk owner Prestwick Partners of Miami has filed for a termination. An attorney for Prestwick offered Shirley Lofgren, 85, about a third of the $221,000 she paid for her unit in 2007. Several weeks ago, the former Chicago suburban homeowner was shopping for mobile homes as her only affordable option.
Concerns about condo-owner rights spurred two Clearwater legislators to introduce bills requiring relocation fees for ousted owners. The bills also call for opposing owners to be paid 110 percent of their purchase price or 110 percent of market value — whichever is greater. In addition, they call for the bulk owners to pay off outstanding first mortgages on the units they buy.
Under current law, individual owners can fight a takeover if 10 percent of all owners vote against it. If residents reject a termination, developers can call for another vote within six months. The proposed law, which passed its first subcommittee last week, calls for a three-year wait.
Opponents of the proposed legislation say it would chill investors' appetite to make the investments necessary to restore a condominium project in need of repair. Dysfunctional complexes could become paralyzed by different owners who have competing interests in a complex, with some owners preferring to live there and majority ownership groups seeking to improve the complex, Fort Lauderdale attorney Mark Grant said.
At The Element, Brandt organized a few dozen owners in voting against a forced sale several years ago. Now, though, a new bulk buyer now controls 89 percent of the units there and could have an easier time buying out remaining owners.
"If it happens, I hope the owners will mount another defense of our properties," he said.