At a small condominium complex on the north side of West Palm Beach, a handful of residents took on a muscular investment group wanting to bounce them from their homes on the cheap — and won.
Condo residents don't always have the ability to take conflicts to court. This is especially so when dealing with deep-pocketed, so-called "bulk" condo owners who wield power over individual owners.
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View of Piper Village apartment complex November 03, 2023, in West Palm Beach. |
Small West Palm Beach condo drew big
investor who bought most of the units
Bulk buyers are investors who purchase multiple units in a
condominium. When they own enough units, they can install
their own board members and control the condominium.
Sometimes, bulk buyers want to own all the units in a
property.
But how they go about doing this is key.
In the case of Sandpiper Village, both residents and
investors are uneasy co-owners in the 69-unit condo that
dates to the 1970s. The property at 3901 36th Street is
south of 45th Street and just east of North Australian
Avenue.
In 2017, Piper Ventures paid $3.9 million for a bulk
purchase of units. Today, Piper Ventures owns 63 units.
The condo association, Piper Village West Inc., consists of
members from Piper Ventures, and the board of directors
consists of three Piper investors: Yoel Jacobs, Ezra Azizi
and Robert Rosenberg, who all live in New York.
With Piper in control of the Sandpiper Village condo board,
the board voted to terminate the condo in 2021.
Then came the purchase offer: About $65,000 per unit to the
remaining owners. That amount would be whittled down to
roughly $40,000 after residents paid condo assessments
imposed by Piper Ventures.
Florida law is clear that bulk condo buyers can't sweep into
condo complexes and try to buy remaining units without
certain rules in place, said Zimmerman, a Holland & Knight
partner.
One important state requirement is the appointment of a
trustee to manage the termination and obtain fair market
value for units the bulk owner wants to buy, Schacknow said.
Florida has a standard process for condo terminations,
Schacknow said. But in this case, Sandpiper residents had to
go to court to get the state law enforced.
In July 2022, Sandpiper owners Beatrice Sutherland and
Denzil Sutherland, Richard Baker, Charlene Moxey, Sherlie
Joseph and H.T.M. Leasing LLC filed their lawsuit, alleging
the bulk owners weren't following Florida law during the
termination attempt.
With the investors bearing down on them, the homeowners
would not be able to obtain similar housing and risked the
loss of their considerable equity in their homes, their
lawsuit said.
Most of the residents are elderly, and some have lived in
the condo's two- and three-bedroom units for more than 30
years.
"In the most expensive housing market in Florida history,
defendants are illegally forcing the homeowners to sell
their homes to Piper Ventures and seek to pay the homeowners
just a fraction of their homes' true value," the lawsuit
said.
But Piper Ventures and the other investors stood their
ground.
In court filings, they said the Florida law differed from
Sandpiper Village condo documents dating to 1977. These
documents allowed a condo termination if 75% of owners
approved it, which meant Piper Ventures would have the upper
hand.
Florida law, on the other hand, doesn't allow termination of
a condominium if 5% of those voting reject the plan.
The investors also said they weren't bound by Florida law
because the law's language wasn't sprinkled throughout the
condo's 1977 documents. Instead, language was only
referenced in two places in the documents, their court
filings said.
As for that $65,000 offer, Piper Ventures and other
defendants said in court documents that the price was based
on appraisals obtained at the time.
They said any disputes should be handled in arbitration and
not the courts, and they asked a judge to toss the lawsuit
filed against them.
Follow the law, a Palm Beach County Circuit Court judge
says
Piper Ventures and its investors did not get their wish.
In September, Palm Beach County Circuit Court Judge Richard
Oftedal rejected most of Piper Ventures' arguments and
refused to dismiss the lawsuit.
In his order, Oftedal wrote that Sandpiper Village's condo
documents stated they could be amended "from time to time"
in accordance with the state's condo laws, a conclusion
upheld by other courts.
Oftedal's order said any condo termination must abide by
Florida laws that safeguard the rights of all unit owners.
This includes paying condo owners fair market value for
their properties, which if the property is homesteaded, must
also be 100% of the original purchase price.
Florida law, Oftedal wrote, "seeks to protect minority
condominium owners from the out-sized influence of
bulk-owners’ termination plans."
Piper Ventures has appealed the judge's decision, said
Michael Boutzoukas, an attorney representing Piper Ventures
in the lawsuit. He declined further comment about the case.
Piper Ventures also wants to block other aspects of the case
from going forward while it awaits a decision on the appeal,
court records show.
This includes allegations by the five condo owners that
Piper Ventures is improperly using common space, in this
case the clubhouse, for an apartment leasing office. It also
includes allegations that Piper Ventures is wrongly charging
the condo board and thus, all the owners, the legal fees to
terminate the condo.
Sign of the times as more investors seek property in
Florida
The Holland & Knight lawyers said the Sandpiper matter is a
sign of the times as older properties along the coast
attract investors wishing to get a toehold in the state's
sizzling real estate market.
In this case, the investor group rents its Sandpiper Village
condos out as apartments.
But if the condo is terminated and the investors control all
the units, investors could also choose to re-sell the units,
rebuild or expand the site, the lawyers said.
Sandpiper Village condo might still be terminated by Piper
Ventures, but it's also likely that the independent owners
would be a large enough bloc to stop the move if the vote
follows the 5% state law, Zimmerman said.
Regardless, "hopefully if (Piper Ventures) tries to do it
again, it would be a fair process," Zimmerman said.