Metrowest condo complex is 'worst of worst' for foreclosures and decay

Article Courtesy of The 

By Mary Shanklin

Published November 11, 2010

  

With pockmarked stucco on its exterior and boarded-up storefronts facing its village square, the beleaguered Hamptons condominium community in MetroWest has had more foreclosures than perhaps any neighborhood in the Orlando area.
   
Built as apartments a decade ago on the north shore of Turkey Lake, the amenities-packed Hamptons units were converted to condos five years ago, during the homebuying frenzy, with some of its 700-plus units fetching more than $200,000.

   

Since then, prices have plummeted 75 percent. Rows of units sit dark and empty. More than half the condos have been in foreclosure at some point during the past four years. The community's sales center is among the properties in foreclosure. Banks won't risk lending money for anyone to buy there, so it's basically reverting to rentals, with investors holding most of the units.


"It's the worst of the worst," said Orange County Property Appraiser Bill Donegan. "Going back to 2005 and 2006, Orlando was really high on condo conversions, and this one was the poster child.

The Hamptons at MetroWest


   

"There are 81 property owners who actually live there — and that's out of 776 units," Donegan added. "This was all part of the frenzy to 'buy a condo next to Universal Studios, and you'll make a million dollars.' "

What distinguishes the Hamptons from Central Florida's plethora of price-plummeting condo conversions is a 2-year-old lawsuit that has come to define the mostly vacant community. At the center of the lawsuit is longtime apartment builder Epoch Properties Inc., under the leadership of Jim Pugh — known throughout the region as the prime booster of a $383 million performing-arts center slated to be built in downtown Orlando.

The Hamptons' condo owners accuse Pugh's company and other firms of sloppy workmanship and hundreds of building-code violations that they say have led to $60 million worth of damage and created an environment marred by water intrusion, mold and unsanitary conditions. The lawsuit, filed in state Circuit Court in Orlando, cites rotting walls, floor damage from leaky sliding-glass doors, improperly installed windows, cracks in ceilings, water stains, and nails popping out of walls.

"It's had issues for some time related to water intrusion and rot from water intrusion," said Orlando Code Enforcement Division Manager Mike Rhodes. "They've been going through a long and tedious litigation with the developer and contractors doing assessments, and they're moving through the property pretty slowly. The entire first floor of commercial [space] in the front part is all rotted out, with materials removed, and it's been shored up. There's been significant problems with window installations that have led to water intrusion. We've had fines running on it for a while."

Walls, floors, windows and balconies have been torn apart and otherwise dismantled in an effort to assess any construction defects.

The builder, Epoch Properties, has filed related legal complaints against subcontractors who designed and worked on the project.

Pugh, chairman of Epoch, said that, in his company's 40 years of building more than 150 multifamily housing complexes, he has never seen anything like the Hamptons.

"It's just a mess. … It's a huge mess due to lack of maintenance and lack of care with leasing," he said. "It's going to get worse because there's no money to maintain it."

Epoch built the apartment complex to standard architectural designs and building codes, Pugh said, but the companies that purchased it for conversion into condominiums ended up selling units to unqualified buyers and renting to unqualified tenants — and no one maintained the property.

"When we sold it six years ago, we were very proud of it," Pugh said last week. "It was one of our showcase properties."

When Epoch sold the complex in 2004, it broke with its usual practice of selling properties to institutional companies that screen residents and invest in upkeep. "We were greedy," Pugh said. "We took the highest price, but how would we have known they would rent it out to unqualified tenants?"

Pugh's company and the Prudential Insurance Co. sold what was then known as Park Place at MetroWest for $90 million to condo developers Tarragon South Development Corp. and Sunvest Communities LLC. At the time, former Tarragon Vice President Tony Martin, now with Wells Fargo, touted the community as MetroWest's "greatest asset."

Pugh, who serves as chairman of the Dr. Phillips Center for the Performing Arts, said he split the sales proceeds with Epoch's partners and that only an insignificant amount from the sale fueled the $7.5 million donation that he made with his wife to the arts-center project several years ago.

In addition to suing the builder, Hamptons owners have sued the complex's condo converters, accusing Tarragon South and Sunvest of concealing construction defects from those who purchased units.

The homeowners' case is set for trial next year, if it's not settled first.

While lawyers for more than a dozen parties wrangle over the case, the community's homeowners association keeps the pools open, the fitness center equipped, and the security gates operational. Despite the turmoil, the group has been able to reduce the amount of overdue association fees, from about 30 percent last year to about 20 percent this year.

Sitting on a bench in the middle of a well-landscaped square that's surrounded by a reconstruction zone, homeowner-association member Beth Heffernan- Monaco said the unit owners have held the Hamptons together.

"We have been able to maintain ourselves with all the ups and downs," Heffernan-Monaco said. In a few years, she added, everything should be repaired.

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