Protecting A Potential Miami Beach Buyer

Article Courtesy of Miami

By The Screaming Eagle
Posted June 30, 2005

Miami Beach  - At a recent Miami Beach commission meeting two new condominium owners approached the legislative body and expressed their disappointment in buying units at the Castle Condominiums. One person purchased in March 05 of this year and the other closed in April 05 this year. This May 2005 the City forcible closed the condominium for life safety issues.

      Imagine how these people must feel. Both closed on their units and one or two months later they were barred from living in their newly purchased units.

      In the normal 30-day period from contract date to closing the following usually occurs:

1.A real estate person introduces the buyer to a unit normally, they personally inspects the unit and write a purchase contract.

2.After the accepting of the offer, the buyer contacts a mortgage firm.

3.The lending firm calls for a property inspection.

4.The potential buyer meets with the condominium board and applies for permission to be accepted.

5.The mortgage now approved goes to the title agency for a legal review. The title agency checks to see if any liens or holds are attached to the unit folio.

6.The deal is ready to close.

      Since the citations were on the building, not the particular unit, the buyer appeared not to be alerted to the buildings violations.

     This writer feels for the buyers. Someone should have known the building had flaws that could have affected the new buyers.

1.Did the realtors have any knowledge that the building had potentially serious problems and did they devolve these problems to the buyer?

2.Did the appraiser find out any information on visiting the common areas of the building on their inspection?

3.Did the board of directors fail to disclose the violations during the screening process? Were the violations skipped or were these faults belittled in seriousness?

City Administration and Commissioners take note. This writer suggests that if the City, in giving any citations, Serious Violations life threatening citations, would blanket a note on all unit titles, the title companies certainly would be able to pick up these building flaws in their searches. New buyers could be noticed and as well the potential lenders. A red flag would be waving, warning all new purchasers that their future peaceful residing and/or future financial (assessment) problems might be forth coming.

     I say financial, because any correcting of the serious problems would certainly either reduce the organizations treasury, or raise the maintenance or even cause a new special assessment to occur. These added monthly costs might be so high as to stress the buyer monthly budget or even drive the buyer into foreclosure later. Even if the new assessments were tolerable, these extra costs could affect the future re-sale of the unit to another buyer.

     Perhaps some of us longer term Beach residents will recall the days when Abe Hirschfield owned the Castle as a hotel. We might recall that when he had a show in the ballroom, the City sent in fire inspectors and closed the room during the shows presentation. Hirschfield went bananas as the inspectors evacuated the guests for serious electrical safety causes.

Perhaps we also should recall the "Caroline Hotel" conversion fiasco. The then condo/hotel conversion also had maintenance problems discovered before the building was fully sold out. The developer had numerous units remaining and was not forking over his units fees, shorting money needed to correct the violations. Again this condominium was cited, the police and fire people arrived, the doors were boarded up, and the act forced residents to move and be evicted. Numerous owners were so financially burdened they were driven into foreclosure.

     One only has to drive up Collins Avenue today and see the old Caroline being rebuilt as the new developer/owner is creating the expansive Canyon Ranch project.

     This writer firmly feels the City could provide a great service to its' potential citizens, by adding a title notation to all units of condominiums, whenever serious building violations are cited. Buyers would know that costly repairs are in the future, and they, at that time, could either back away from the contract or go ahead but with full knowledge that some financial burden is around the corner.

     In my years involved in real estate transactions, the lenders normally have a questionnaire forwarded to the condominium boards. This form asks if any violations, pending assessments or other pending financial changes are in the future. Most reputable real estate brokerage agencies also have the seller fill out a sellerís condition affricative or property disclosure form that is given to the buyer and added to the contract. When no realtors are involved, many times, disclosures are never provided.

     A word to the wise, in buying any condominium, buyers should read the condominiums documents completely, request a treasurers report, and during the screening interview, bring your attorney or real estate agent and by all means - "ASK QUESTIONS"!