Article Courtesy of The Courthouse News Service
By Izzy Kapnick
Published May 27, 2018
WEST PALM BEACH – An antitrust lawsuit in South Florida court claims an
investment firm bought up condo units in a large community and then wielded
its statutory power as a “bulk owner” to try to force the remaining owners
to sell their units against their will.
In the lawsuit in Palm Beach County court, condo owners say investment firm
Axonic Properties used a controversial Florida condominium statute to gain
leverage over them and pressure them to sell their units in the Palm Hill
apartment complex in West Palm Beach. According to the complaint, it’s a
common but often contentious investment strategy employed by large-scale
The Chapter 718 statute at play generally dictates that once an investment
company or bulk owner controls a certain percentage of the votes in a
community (e.g. by buying most of the units), it can terminate the
community’s status as a condominium and force the remaining owners to
relinquish their units at market value.
That law has been revised by the state legislature in recent years to
provide more protections to homeowners.
But the newly filed case claims the statute is still being taken advantage
According to the lawsuit, Axonic Properties’ purchasing entity Residential
Condominiums LLC would give Palm Hill sellers side-payments so that the true
sales prices of units would be under-reported. The strategy mitigated
property tax exposure while artificially depressing market valuations as
Residential Condominiums LLC bought up property in the Palm Hill community,
the lawsuit alleges.
The side-payments were purported to be made for personal property such as
appliances and other belongings in a purchased condo unit, the complaint
claims. But the payments were, according to the plaintiffs, highly
disproportionate to the actual worth of these items. One plaintiff unit
owner claims it was offered $30,000 for personal items that were not “worth
even close” to that sum.
Though the plaintiffs were all offered these large compensatory sums for
their personal effects, they maintain the bids they received from
Residential Condominiums LLC were still unfair. They claim they were
pressured to sell while facing the prospect of a condo termination under the
718 statute, which would entail forced sale at the distorted market
valuations listed in the county records, they claim.
The plaintiffs in the Palm Beach County case include two individuals — Paula
Ramierez and Sonia Velez — alongside a group of landlord companies who own
property in Palm Hill.
The plaintiff landlords, who have not sold their units, say that the
association for the community didn’t properly address water leaks and other
issues, and poached prospective renters from them.
Plaintiff Ramierez, who did sell, claims Axonic’s purchasing entity raised
maintenance assessments and levied special project fees in the community to
the point where she couldn’t afford to live there. She sold her 792
square-foot unit to the firm for an $85,000 price tag, according to county
records. She says she received an additional $15,000 from Residential
Condominiums LLC for her personal belongings.
Among other relief, the lawsuit demands damages under the Florida Antitrust
Act, as well as a declaratory judgment that Residential Condominiums LLC has
not met the legal requirements to carry out its plan of condominium
termination, which was set in motion last week.
The case was filed May 19 and docketed Wednesday May 23.
The plaintiffs are represented by Geoffrey Ittleman in Fort Lauderdale.
A review of property records show that Palm Hill is located in an urban area
of West Palm Beach and contains more than 350 units, which typically measure
about 790 square feet.
In a sample of 40 recent Palm Hill sales since May 2017, the records show
that a large majority of unit owners in the complex sold their properties to
Residential Condominiums LLC at prices significantly higher than what they
originally paid, booking more-than 100-percent gains in many instances.
A separate but similar piece of litigation was filed in Lee County last week
over the Chapter 718 condo termination statute.
Unlike the Palm Hill residents who booked a gain on their sale, the two Lee
County plaintiffs, a couple, claim they’ll face massive losses if an
investment firm (not Axonic) is allowed to carry out its planned condominium
termination in the Oasis Tower Two community where they live.
After taking control of the Oasis condo, the firm offered these plaintiffs
$251,000 less than what they paid for their unit back in 2008, they say. If
they accepted that pricetag, it would leave them $165,000 in the hole on
their mortgage, they say.
Among other counts, the Lee County lawsuit requests that court find
Florida’s condo termination statute unconstitutional under the Takings
“Plaintiffs have fundamental rights and a liberty interest in their private
property that may not be deprived without due process of law and/or adequate
compensation,” the Lee lawsuit reads.
The defendants in that case include the Florida Department of Business and
Professional Regulation and the termination trustee; the investment firm is
not named as a defendant. In addition to the constitutional arguments, the
plaintiffs have a back-up count to challenge the condo termination within
the framework of the Chapter 718 statute.
The statute, which has been the subject of controversy for years, was
revised in 2015 and 2017 to address complaints from disgruntled condo owners
and property rights advocates who have lamented alleged unfair treatment by
According to a Bakalar and Associates review, the 2017 revisions expanded
compensation protections for homesteaded condo owners so that all of them
are entitled to, at a minimum, their original purchase price when a bulk
owner induces them to sell under the so-called “optional” condo termination
process in the statute. The revision also reduced the percentage of
objecting condo owners required to halt the termination process.