Article Courtesy of The Miami
Herald
BY DONNA GEHRKE-WHITE
Published November 18, 2007
Their first home should be their joy.
But Michelle Fernandez and her fiancé, Efrain Uribe,
are bitterly regretting buying a place from a developer converting a
high-rise apartment complex into condos in North Miami Beach.
Now, they say, they're
stuck with shaking elevators, exposed pipes, badly stained
hallway carpets, a flooded laundry room and even mold in the
couple's air conditioning closet.
''Nothing is what they promised,''
Fernandez says.
Yet, she and her fiancé may be among
the more fortunate among the thousands who bought apartments
converted into condos in South Florida in the last five
years: An executive at the development company says at least
some of the work will be done.
Others who have bought condo
conversions have discovered they're on their own to fix code
violations, an aging infrastructure and faulty equipment. In
some cases, that means the new condo associations are
levying thousands of dollars in special assessments for
repairs.
''The actual nightmare starts after
they move in. Six months to a year later, they discover they
got sold a lemon,'' says Jan Bergemann, founder of Cyber
Citizens for Justice, a grass-roots consumer group that has
fielded dozens of complaints about condo conversions.
Most are from first-time home buyers
''who don't even have money to talk to an attorney,'' he
adds.
More than 43,000 apartment units have
been converted to condominiums and sold in Miami-Dade and
Broward since 2004. Because most of the buildings were
older, the units were less expensive than ones in new
buildings, attracting lower-income and first-time buyers.
The condition of the buildings varied
widely, as do the required repairs. And different cities
have different laws on what repairs are required before
apartments can be converted to condos and sold.
The state law on condo conversions is
''very vague,'' says Dale Lee, building official for North
Miami Beach. ''Some municipalities feel no requirement'' is
mandated when rental apartments become condos, he says. But
North Miami Beach interprets the state law as requiring that
life-safety equipment be up to code at the time the units
are sold. That includes balcony railings, smoke detectors
and fire alarms.
''I'm looking out for the consumer,''
Lee says. "We feel it is a change of use.''
Some new owners complain cities don't
find code violations in converted buildings until after the
developers have sold all the units, says state assistant
condo ombudsman Bill Raphan.
In fact, some developers did little
more than cosmetic work while converting aging apartment
buildings, he says. |
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Efrain
Uribe and Michelle Fernandez regret their first-time
purchase of a home at the condo conversion of Inland
Towers in North Miami Beach.
BEFORE
BUYING A CONVERTED CONDO
If you are considering buying an apartment that is
being converted into a condo, you should:
• Read thoroughly a
state-required engineer's report that outlines the
condition of the converted building. Ask questions. You
should know the age of the roof, air conditioning and
electrical system. This will help you determine the cost
of future repairs.
• Understand whether
your converted building will get adequate reserves funded
by the developer or warranties on major items such as
roofs, and how long the warranties are.
• Ask whether the
building was constructed under the new tougher codes,
which went into effect in 1994. Those buildings have
needed fewer repairs. Some buildings built after 1994 were
constructed under the old codes, so it's important to ask.
• Don't assume the
renovations you see in the condo model or the floor where
the model is located will be done in your unit and on your
floor. Get any promises from the developer in writing.
• Research the
developer's reputation and business history.
• Check with the
city to see if the building has any code violations. Also
make sure the developers have obtained certificates of
occupancy so that you have permission to move in once you
have bought the unit.
-- DONNA GEHRKE-WHITE
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''The developer painted the walls and called them
condos,'' Raphan says.
One woman told Bergemann, the condo activist, that
she had to take out a $15,000 line of credit to pay a special assessment
for repairs after she moved into her converted unit -- only to discover
that her new condo association was planning another assessment to cover more
work.
She and several others declined to talk to The Miami
Herald because they feared property values would plummet if people knew of
their buildings' problems.
Nikki
Poulos, who bought two units in 2005 in a small converted apartment
complex just off Biscayne Boulevard in Miami, says people should know that
problems can arise months after signing on the dotted line.
"I
was happy to buy -- the model apartment looked nice,'' she
says.
Then months later she says the
carpeting disintegrated and had to be replaced.
She also discovered after closing that
an electrical plug didn't work -- it hadn't been connected
to electrical wires. A door rotted and there was mold on
baseboards. ''In one bathroom the tile was so poor that
water leaked down the well and into the kitchen,'' she says.
Developer
David Meunier also didn't keep his promises, such as
providing pool furniture, she says. |
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Nikki Poulos is disappointed with her two units at a small converted apartment complex in Miami. The pool area lacks furniture and the pool pump door is unlocked.
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Meunier
says the units were all in good shape at the time of turnover. He says the
chaise lounges he had bought for the pool deck were stolen. He blames any
problems on renters. ''Out of 15 condominiums, only one has been used by a
homeowner,'' says Meunier.
He himself kept two of the units as investments.
''This is an up-and-coming neighborhood,'' he said.
STRUGGLING TO PAY
He
notes that some of the building's cash-strapped investor-owners are
struggling to pay their monthly maintenance fees of about $125 to keep the
complex in good shape. ''Some are behind $1,400,'' he says.
During
the real estate frenzy, when entire buildings sold out in a
day, many buyers snapped up units without reading the fine
print, analysts say.
''When you are buying a condo conversion
you aren't buying new,'' reminds Gary Saul, an attorney who
represents developers.
The state requires developers to give
buyers copies of an engineer's report outlining the condition
of the building, he says. But Saul believes few buyers
actually read it.
Developers also are required either to
set aside reserves or buy warranties, usually for a few years,
on major items such as roofs, he says. Again, he believes few
of the buyers learned what developers were leaving behind.
''In some cases the developers were
supposed to place monies in reserves to cover systems that
would become |
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Fernandez
stands on dirty carpet in the hallways of Inland Towers.
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obsolete
such as roofs, the electrical wiring. In many cases they did not place
sufficient amount of money,'' says real estate analyst Jack McCabe,
president of McCabe Research & Consulting in Deerfield Beach.
A faulty lock to the meter room at the same place.
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But during the boom few
objected because property values were going up ''double digits
every year,'' he says.
Buyers thought they would sell quickly
so it wouldn't matter if the developer hadn't put up the
required reserves, he said.
Then the market tanked and suddenly many
discovered they couldn't sell -- and their aging building
needed work that they would have to pay for, he says.
Reputable developers will make repairs,
Saul says, because they want to stay in business.
At Inland Towers in North Miami Beach,
an executive with the developer, Mederos & Associates,
told The Miami Herald his company would make the promised
repairs.
''Do you think I want bad conditions? We
are trying,'' says operations manager Gene Lopez. |
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CASH FLOW WOES
But the company had a cash flow problem earlier this
year after buyers became scarce and it was hard to get loans. Now that a
bank has committed to loans for improvements such as hall carpeting, ''we
expect to get things done,'' Lopez says.
The company is also renting units to get cash, he
adds, while continuing to try to sell apartments, with prices starting at
$159,900. He recently met with a Herald reporter to show how Mederos &
Associates had painted the tower, refurbished the lobby and installed new
mailboxes.
He adds that his company is
now finishing work on new balcony railings required by the
city.
North Miami Beach building official Lee
says none of the apartments should have been sold until the
developer installed the new railings, and he refused to give
certificates of occupancy to the new units until the work was
done.
That's why buyers earlier this year,
such as Fernandez and Uribe, weren't listed as actual owners
and couldn't get the $25,000 homestead exemption for the
condos.
''Our taxes are due and we will have to
pay the entire amount,'' Fernandez says.
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Holes for the air conditioning units at a Biscayne Boulevard complex were never filled in.
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Last
year, the couple oohed and ahhed over the model apartment's granite
countertops, maple cabinets and crown molding.
They closed last March after they say they received
promises that the building would be renovated just as tastefully.
They thought the covered walls on the 10th floor of
the model unit were a rendition of how their own floor would look once the
overhead pipes were hidden.
But Lopez now says developers never promised the
upgrade. Previous investors had covered the pipes on the 10th floor, he
explains.
But what alarms the couple most is that a firefighter
during a recent inspection spotted mold in their air conditioning closet.
''He said we shouldn't be in the unit,'' Fernandez says.
Lopez blamed any mold on the couple not properly
maintaining the air conditioning.
''But how could the mold develop so fast?'' Fernandez
counters.
She worries about its health effects -- and is
demanding that the developer fix it to their satisfaction, which she says
hasn't been done yet.
''It's making the place unbearable to live in,'' says
their attorney, Joseph H. Fernandez.
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