I think it was Mark Twain who advised people to buy land because God wasn’t making any more of it. He also said, “No man’s life, liberty or property are safe when the Legislature’s in session.” His last witticism may have been more accurate than the first.
Look around the country where condos and residential high rises are being bought up by foreign investors. In Florida, California, Texas, Colorado, and Pennsylvania, senior citizens are buying small retirement homes where they hope to be comfortably living out their years. But as more and more of these apartments are turned into rentals, property values have plummeted.
Teresa Fusco of Reading, Pennsylvania found herself in a stunning situation. Her condo at Deer Path Woods was initially appraised at more than a hundred thousand dollars. She was one of eleven families who owned their homes outright. Ninety seven other units were held by renters, but the appraisals all said the units were worth about a hundred-thousand each.
Then, Teresa learned that an investor was buying up all those rental units for about $7200 apiece, essentially giving himself almost 90% control of the entire complex.
It gets deeper, still.
The investor said that now he had all the votes he needed to control the association he promptly dissolved it. Throwing his new found weight around even more, the investor announced he was putting the entire complex up for sale. He got himself a new bulk appraisal which said the complex was worth far less than anyone imagined and the condominium was suddenly on the auction block.
Any guesses as to who the top bidder was? Yep, the same investor who bought up all the rental units he had initially purchased and put up for auction. Except he now owned all those units which were once in private hands. Hands like those of Teresa Fusco.
Those former homeowners are just shaking their heads in bewilderment. This kind of thing can’t happen in America can it?
Well, it happened in Pennsylvania.
As a corporation, an H.O.A. is a defective product.
The Deer Path Woods story is from the summer of 2012, and I did mention it in my book. One detail you left out of your summary is that the home owners who were divested of their property and evicted are still responsible for paying the mortgages.
There is a more recent example of home owners being forced to sell their property to an investor/corporation from a few weeks ago:
If you purchased a home governed by an H.O.A. corporation, your personal assets are forever collateral to whatever debts and liabilities the H.O.A. corporation creates. So when an H.O.A. corporation decides to goes out-of-business (or goes bankrupt, or gets sued, or gets fined for breaking the law, etc.), the home owners are responsible for paying the creditors of the H.O.A. corporation. “The property and personal assets of the owners esentially beocme the ‘assets of the company’.” Unlike a regular corpration, “individual owners are not insulated from the debts of the corporation“.
During the Travyon Martin story, Evan McKenzie wrote that:
I’ve brought this up with some of my elected representatives (all Democrats), who are totally uninterested in this problem.