Palms shortfall indicative of larger condo woes

Article Courtesy of The Sun Sentinel


Published February 19, 2010

Hernan Casanova moved into his new condominium at The Palms with high hopes. The 37-year-old property manager had saved $500 for a down payment and the $149,900 mortgage was something he could afford, even with a $128 monthly maintenance fee.

The complex offered a club house, a pool and a mix of working families. Three years later, however, Casanova faces a dire future. The vice president of The Palms says the foreclosure crisis has emptied 40 percent of the 168 units at The Palms. With many units not contributing monthly payments, the remaining owners must pick up the slack and share all the expenses.

Casanova's monthly payment for mortgage and maintenance has increased 27 percent, from $1,200 for a two-bedroom, one-bathroom unit to $1,400. He says he negotiated a deferred plan with the bank after he lost his job in July, but maintenance for his unit has risen from $128 to $155.

But The Palms is not the only condominium complex having such problems. Condo Vultures, a Bal Harhour-based firm that monitors foreclosures nationwide, reported that in November 2009 there were more than 7,000 overall foreclosures combined in Palm Beach, Broward, and Miami-Dade counties. Condo owners that remain can tell you the pain was not experienced by only those who lost their units.

On the Galt Ocean Mile, Kethleen Freismuter says she and other residents are picking up the slack for 10 units foreclosed in their building. Maintenace, she said, rose 15 percent this year and could have been more had it not been for a state law limiting the increase.

And things could get worse. Despite what Casanova and the other owners are paying, it still may not be enough to meet the The Palms' bills. Dissention has seen a complete overthrow of its board of directors. Last April, the city threatened to turn off the water unless The Palms paid its $89,000 water bill. When HUD paid its share, the water stayed on, but now, Casanova says, The Palms owes $130,000 for water.

"The new board doesn't know what to do. The President is making decisions without consulting anybody else. The management company says they were not fired even though they were sent a certified letter," Casanova said. "With nobody paying maintenance, then taxes, insurance, lawn pool, city water and electricity are not being paid. What is going to happen?"