Condo reform does not help all owners [6-23-15]
Article Courtesy of The Orlando Sentinel
By Mary Shanklin
Published June 22, 2015
Winter Springs condo owner Shirley Lofgren, 85, expects to be forced out of her home under a Florida law that allows developers to strip owners of their homes. The condominium termination law, as its called, lets developers take title to condos when only 20 percent of the units are in the hands of owners.
But Mission Club condo takeover likely unaffected by this law reform.
Gov. Rick Scott this week signed a law aimed at protecting the rights of condo owners when developers are trying to convert complexes into rental properties.
The legislation is designed to restrict buyouts that enable companies that own the bulk of the units in a condo complex to force remaining owners to sell to them. The new law calls for bulk-ownership investors to compensate individual owners for the amount paid in most instances.
State Rep. Chris Sprowls, R-Palm Harbor, who introduced the legislation, said the main concession he made in getting the legislation approved was restricting it to help only owner occupants who live in their condos instead of investors and snowbirds who may use the condos as vacation homes.
“We wanted to cover anyone whose ownership rights were terminated, but we had to narrow it to the people who were homesteaded,” Sprowls said. “We needed to make sure that people who had these as primary residences and didn’t have anywhere else to go were covered.”
The new law comes too late for Winter Springs resident Shirley Lofgren. Earlier this year, Miami-based developers terminated the 85-year-old’s condo rights and offered her less than a third of the $217,000 she paid for it in 2007. The undisclosed sales price has not been recorded; Lofgren is renting the condo she had owned for years.
“It’s unfortunate that the new law didn’t help the thousands and thousands of people who, well before there was any publicity about this, got slaughtered by these buyers,” said Lofgren’s son-in-law, Robert Mattis. “But it does help people in the future, and that’s good.”
Under the law signed Tuesday, Lofgren would have gotten back the $217,000 she paid for the unit at the peak of the market.
A day before Scott signed the law, which took effect immediately, developers of Mission Club condos in south Orange won approval to take over the 350-unit condo complex.
Mission Club’s bulk buyers said the timing was “just a coincidence,” but Sprowls said the New York-based ownership group ESG Kullen “absolutely tried to rush it into effect.”
Most owners in Mission Club will not benefit from the new legislative protections, because it is not their primary residence; Orange County records show just one homesteaded unit, and about two dozen owners have Orlando mailing addresses. ESG Kullen began purchasing units there last year. In May, ESG Kullen gained control of enough units to call for Monday’s termination vote.
ESG Kullen lobbied for changes in the newly approved condo-termination laws. Company principal Eric Granowsky issued a statement about its takeover of Mission Club: “Our intention is to work with every owner respectfully and fairly through this process, following the course of action agreed upon in the Mission Club Declaration of Condominium. We believe the best result for all parties is that this project become a rental community.”
The new requirements call for investors to fully reimburse owner occupants, except when second mortgages are outstanding. Sprowls said the new rules could force investment groups to rethink their business model — they may be less inclined to take on the condo-to-apartment conversions in the future.
Since 2007, developers and investors have taken ownership of more than 11,000 condominiums throughout the state and forced individual unit owners to sell their homes and vacation homes, state records show. That law was designed to enable renovation of blighted condos in the wake of falling values amid the Great Recession.
In Central Florida, Enders Place at Baldwin Park, Conway Forest, Esplanade Condos, Harbor Beach, Summerlin at Winter Park and Harbor Bay Retirement Village are among the condominium projects that have become rental properties as demand for apartments has surged.
Pennsylvania resident Debra Erickson and her husband bought a unit at Mission Club for $215,000 in 2008 with part of their retirement savings. She said she expects the new ownership group to offer her a fraction of what she paid. If she wants to challenge the offer, she will have to go through an appeals process.
Erickson said she’s not only disappointed that she’s likely to lose much of her original investment, she also said the reform laws will only discourage buyers like herself from purchasing Florida condos as second homes.
“Honestly, the Sunshine State is not so sunny for those who put all of their hard-earned money into a place they were going to call home and then have it taken away by powerful and greedy investment companies,” she said.