Saturday, February 07, 2015

Condo owners forced to sell for peanuts

Republicans and libertarians delight in complaining about eminent domain.  They think it some sort of tyranny when local governments force people to sell their property at current market value so the land can be cleared for some public use.  But the same people just love HOAs and condo associations, which they think are bastions of freedom because people supposedly consented to the loss of their liberties. I've never found that argument convincing, but how about this, libertarians and Republicans?  Here's the private equivalent of eminent domain, without the due process clause. This sort of thing has been happening all over the country, as failing condo associations get taken over by investors who buy up enough units (usually at foreclosure sales) to control the association, force the remaining owners to sell for a fraction of what they paid for the units (see below--one woman paid $217,500 for her unit and is being forced to sell for $46,500) and terminate the condominium entirely, turning it into an apartment building.  We call that "de-conversion" because its the opposite of converting apartment buildings into condominium projects.  Florida changed the law in 2007 to make it easier for investors to do this--they no longer need 100% consent to terminate the condominium, whiich was the standard rule for decades in most states. It's all perfectly legal.
"ORLANDO – When Amanda Gonzalez bought her two-bedroom condominium near Orlando in 2006, she thought she was getting a foothold on the America dream. Gonzalez never missed a payment for her mortgage, condo fees or taxes, even after the real estate crash in 2008 and 2009. When she was laid up after an accident, and money was tight, she still kept her books in order. So it came as a shock when the company that sold her the unit told her the complex was being converted into rental apartments ("terminated"), and that she had to accept what the company offered – far less than what she had paid.  Under a Florida law, companies that own more than 80 percent of condo units in one building can terminate a condo complex under certain conditions and turn it into apartments for rent. The companies have to pay the owners they're evicting the "current market value" for their units, which may not even cover their mortgage."

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