An apartment building turned condominium,
pillaged then deserted by investors, it has been rejuvenated by a bulk
buyer who recycles units back into rentals with prices in the
$1,200-a-month range.
But
some remaining boom-time buyers feel conquered rather
than liberated by the New York-based company that
purchased 90 units in late 2009.
The
$4 million-deal gave the group control of the homeowners
association, which includes the power to raise fees,
levy assessments - and reject new buyers.
Owners
and Realtors complain that the association has hiked
dues while blocking new buyers so it can snap up units
for itself.
The
association argues it's protecting its |
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Palm
Court condos that sold for about $220,000 are now worth $43,600.
The bulk owner rents units for about $1,200 a month.
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investment
by barring people without the means to meet condominium obligations.
"We've
taken the eyesore of Wellington and turned it into a very
nice place to live," said John Slattery, who, as
director of acquisition for the bulk buyer, is president
of the Palm Court homeowners association. "There were
drug dealers, pit bulls, derelict cars, garbage
everywhere. The place was a disaster."
As
real estate's rule changes turned the tables on winners
and losers, Palm Court's discord is mirrored in shared
communities throughout Florida.
Glory-day
investors hoping to pad their retirements now make
payments on homes worth a pittance of their purchase
prices and in communities where they have little say over
the future.
At
the same time, bulk buyers cleaning up after the party
want to make the most of their acquisitions, which can
mean expensive improvements, the costs of which are shared
by all.
"These
bulk-buyer deals have given power to people with money who
can trample rightfully and lawfully on the rights of
owners unlucky enough to have bought at the wrong
time," said Jan Bergemann, a homeowner advocate who
runs Cyber Citizens for Justice, a DeLand-based watchdog
group. "They charge assessments to pretty up the
place and line their own pockets." |
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John
Slattery, director of acquisition for the firm that bought 90 units
at Palm Court, and now president of the community's homeowner
association, says, "We've taken the eyesore of Wellington and
turned it into a very nice place."
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Palm
Court started in 1987 as the Pine Cones apartments, a covey of two-story
buildings nestled amid towering pine trees near the intersection of
Wellington Trace and West Forest Hill Boulevard.
A
Miami developer bought the 120-unit complex, reselling individual units at
about $220,000 .
About
30 people inked deals to buy, only one of whom planned to live there full
time, Slattery said.
Then
the market crashed.
Remaining owners are now
trapped with units valued at $43,600.
"It was a very bad
investment," said Christina Butzer, who bought a unit in 2007 with
$22,000 down and an adjustable-rate mortgage.
Butzer, who rented out her
unit, said she paid her bills until increases in her mortgage payments and
association costs forced her out.
With the higher costs, Butzer
said, she struggled to get tenants because they could pay hundreds of
dollars less by renting from Slattery or in nearby developments.
"The property is now
gorgeous, but he knew we couldn't afford it," Butzer said. "I
felt like he was just going to keep assessing us. It's not worth the fight
anymore."
Another owner, who didn't want
to be identified, said she had bank approval for a short sale, but the
association put a lien on her property for back dues, effectively killing
her chances of selling. She expects the bank to foreclose soon.
ABC Properties, the parent
company of the bulk buyer that took over Palm Court in December 2009, owns
and manages 185 buildings in 11 states.
Its additions to Palm Court
include a putting green, dog park, basketball hoops and playground.
Security cameras were
installed, tennis courts refurbished, a fitness facility put in.
All of it cost money.
Slattery said monthly
homeowner fees were raised from $137 a month - a teaser rate that he said
was set by the original developer - to $265 a month.
An assessment of $2,959 per
unit was levied in April 2010 to help pay for enhancements.
The lone owner-occupier of the
30 original purchases is pleased with the changes.
"The place has really
cleaned up," said Robert Roca, who bought his 980-square-foot condo
in July 2006. "Since the new association took over, it seems like
nice families are moving in."
Slattery established rules,
such as no vicious dogs, and requires renters to prove a gross income 2½
times the monthly rental rate.
After the initial 90-unit bulk
purchase, Slattery said, he's acquired 10 more units. Six of those had
gone into foreclosure. He picked up most of those for between $30,000 and
$40,000 each.
Debbie Smith, broker/owner of
Home Run Real Estate in Lake Worth, said the Palm Court association
"refuses everything" when outside buyers are interested in the
remaining units.
Smith's firm handles sales for
federal mortgage backer Fannie Mae, which owns several Palm Court units
after foreclosing on them.
"These prices are so good
and it's in Wellington and people want to live there," Smith said.
"I've probably had nine offers turned down."
Florida law gives associations
the "right of first refusal," which allows them to reject buyer
offers, but then they are required to submit their own offer on the same
terms.
"They offer $20,000
less," Smith said. "It's self-dealing."
Slattery said he's never
formally exercised his right of first refusal but acknowledged he's told
people not to apply.
One man from Canada wanted to
pay cash for a unit and rent it out, but he couldn't prove a U.S. income,
Slattery said.
Another cash buyer sought a
unit for her unemployed daughter.
"I said, 'Don't bother;
I'm not going to approve her,'" Slattery said he told the woman.
"Just because they can pay cash doesn't mean they can continue to pay
the assessments."
Slattery said he wants to own
all of the units but isn't going to break the law to get them.
And he's going to avoid bulk
condo deals in the future.
"It's been a total
headache," Slattery said.