Where Does CAI Stand On Florida Condo Terminations?

guest blog by Deborah Goonan

Unless you’ve been hiding under a rock for the past decade, you have probably heard about Florida’s boom and bust real estate market for condominiums. The big news right now is the fact that hundreds of condo owners are being forced to sell their homes at a loss to developers and investors, in a series of so-called voluntary condo terminations.

In a recently published article in the Wall Street Journal,  Jack McCabe, CEO of McCabe Research & Consulting LLC, was quoted as saying close to 400 uncompleted complexes remain as part condo and part rental in the state of Florida.

A Bloomberg Businessweek report published last month estimates that 235 condominiums have been terminated statewide since 2007.

West Palm Beach attorney and CAI member, Michael Gelfand, was also quoted in the WSJ article,“It is a classic case of unintended consequences” of the 2007 amendment, which, according to the article, he helped to draft.

Hundreds, perhaps thousands of condo owners have been caught in the middle of a battle to keep their homes or at least receive just compensation. Owners from 13 condo complexes have joined together to fight against developers, and have created their own Facebook page: Floridians ACT.

Attorney Michael Mayer, of Peyton Bolin PL, which operates five offices in Florida, has taken up the fight for owners of Via Lugano condominium in Boynton Beach. According to Mayer, the legal suit contends that the 2007 statute amendment allowing for optional termination by less than unanimous consent does not apply to condominiums created prior to its enactment. The suit also challenges the takeover on Constitutional grounds, at both state and federal levels, as a violation of owners’ rights to “acquire, possess, and protect property.” The Peyton Bolin law firm is listed among CAI’s member service providers.

Ironically, in the midst of terminations of unsuccessful condo projects, a south Florida real estate blog reports that lenders have eased financing for development of 260 new condo towers (over 35,000 units) in South Florida alone, most of them close to the water and on the high end of the market.

So what is CAI’s official Public Policy on the matter?

Look no further than page 58 of CAI Government & Public Affairs Public Policies:

“Community Associations Institute (CAI) supports protections that enable property owners to challenge governmental taking of common or private property. CAI opposes legislative or judicial actions that would limit or restrict the ability and rights of community associations to maintain control over association common property.”

Read between the lines: Developers and private investors who take control of the Association must not have their property rights restricted. Furthermore, it would be inappropriate to protect owners’ rights where the party seeking to take property rights is not the government.  CAI maintains, generally supported by the courts, that Community Associations are corporate entities, and are not government entities.

Whose interests does CAI actually represent? The introduction to Public Policies provides some contradictory language:

“CAI is dedicated to fostering vibrant, responsive, competent community associations that promote harmony, community and responsible leadership. CAI advances excellence though a variety of education programs, professional designations, research, networking and referral opportunities, publications, and advocacy before legislative bodies, regulatory bodies, and the courts.

In addition to individual homeowners, CAI’s multidisciplinary membership encompasses community association managers and management firms, attorneys, accountants, engineers, builders/developers, and other providers of professional products and services for homeowners and their associations. CAI represents this extensive constituency on a range of issues including taxation, insurance, private property rights, telecommunications, fair housing, and community association manager credentialing. CAI’s over 32,000 members participate actively in the public policy process through more than 60 local, regional and state chapters and 35 state Legislative Action Committees and one federal Legislative Action Committee.”

Are Community Association Boards that are controlled by developers and investors exercising “responsible leadership” in these hostile corporate takeovers that deprive Americans of their property rights? Does Florida Statute 718 represent the “individual homeowners” constituency of CAI, through optional termination provisions drafted by one of their own member attorneys? It seems the statute as written supports the collective interests of the Association rather than the individual interests of owners.

Is it realistically possible to provide “advocacy” that will encompass a “multidisciplinary membership” where the interests of one subset of a constituency are often in direct conflict with the interests of another?  You be the judge.










Please follow & like us :)


Ward Lucas is a longtime investigative journalist and television news anchor. He has won more than 70 national and regional awards for Excellence in Journalism, Creative Writing and community involvement. His new book, "Neighbors At War: the Creepy Case Against Your Homeowners Association," is now available for purchase. In it, he discusses the American homeowners association movement, from its racist origins, to its transformation into a lucrative money machine for the nation's legal industry. From scams to outright violence to foreclosures and neighborhood collapses across the country, the reader will find this book enormously compelling and a necessary read for every homeowner. Knowledge is self-defense. No homeowner contemplating life in an HOA should neglect reading this book. No HOA board officer should overlook this examination of the pitfalls in HOA management. And no lawyer representing either side in an HOA dispute should gloss over what homeowners are saying or believing about the lawsuit industry.

6 thoughts on “Where Does CAI Stand On Florida Condo Terminations?

  1. Cynthia

    This is a disgrace and a nightmare for far too many innocent homeowners whose primary and only homes can be taken for pennies. CAI’s “opinions” are, and should be just that, “opinions.” Florida, has statutes and laws, and very possibly some laws that need to be changed to protect the homeowner interests. The property, and/or equity thefts to the innocent and unsuspecting homeowners, in, or by, any of these abusive groups, and/or their associates, or “investors,” has to be stopped.

  2. robert

    > hundreds of condo owners are being forced to
    > sell their homes at a loss to developers and
    > investors

    > Developers and private investors who take
    > control of the Association must not have their
    > property rights restricted.

    On October 17, 2011, Mitt Romney told the editors of the Las Vegas Review-Journal

    “Are there things that you can do to encourage housing. One is, don’t try and stop the foreclosure process. Let it run its course and hit the bottom, allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. The Obama Administration has slow-walked the foreclosure processes that have long existed, and as a result we still have a foreclosure overhang.”

    The Wall Street Journal called it “Romney’s Finest Hour” (October 28, 2011).

    1. Deborah Goonan

      Take note that the owners being forced to sell at a loss are NOT facing foreclosure. They have been paying their mortgages, property taxes, and assessments. They just happened to pay high prices for their units at a time when the market was booming. These owners have a loss of equity on paper, but have elected to stay put, mainly because they cannot afford to sell at a loss and move on. A high number of Single-family detached homeowners in HOAs in Florida are electing to wait out the market, or to make the best of their situation because they are at a stage in their lives where moving is not affordable or practical.

      A condominium project is structurally different because there is shared ownership of common areas and elements. Still, the owners who are not in a position to sell should not be forced to endure great financial loss – one that translates to the great financial gain of investors and developers initiating the takeover. It is fundamentally unconstitutional and unjust.

      The foreclosure crisis is an entirely separate issue.

    2. Deborah Goonan

      These condo takeovers will result in more foreclosures, because owners will be left with outstanding mortgages for condos they no longer own. In the financial industry that is referred to as “non-performing mortgages.” Lien holders are not happy about this either.

      The seeds for this debacle were planted prior to purchase. After all, when banks were financing condo conversion and construction projects earlier in the decade, one can argue many such loans and investments were risky from the start. Couple that with easy mortgage lending – anyone willing to sign the papers was granted a loan, often with predatory or unconscionable terms.

      At first, when owners began to default, they were demonized in the media as deadbeats, remember? But later on it was “discovered” that lenders were often unethical, irresponsible, or even criminal in their practices. These bad loans given to individuals and investors were quickly resold and bundled. We know what happened to the financial and housing markets after that.

      The current lien holders that will take the loss on these non-performing mortgages are most likely not the original lenders.

      The parties that caused these problems – large real estate corporations, big banks and mortgage lenders, and legislators that enacted deregulation or poor regulation of the industry – have not borne the brunt of their failures. Who has paid, and continues to pay? Homeowners, displaced tenants, and taxpayers.

      The next wave of developers and investors have swooped in like vultures to feed on the carcasses. Nothing wrong with that, provided we do not blame and punish the innocent victims in this grand deception scheme.

      1. robert

        > Take note that the owners being forced to sell
        > at a loss are NOT facing foreclosure.

        Yes, I am aware of that.

        If my other two comments in this thread had been published, the context might have made my point — that our policy makers favor investors and developers over individuals — a bit more clear.

        Note that Lord Romney has not a word to say about the people who bought and live in those homes with their spouses and children. He is concerned about the Important People. That would be the ‘investors.'”

        “Romney’s finest hour” is even more outrageous, considering the amount of foreclosure fraud that was going on at the time (e.g., the robo-signing scandal), and probably still is. His response to foreclosure fraud was to tell home owners to “Occupy the Bank

        ROMNEY: That might be something to go down to their office — big office in Boston — go sit in their front lobby and say ‘I’m gonna sit here until you sit down with me and look at these documents.”

        PYRA: Occupy Bank of America?

        ROMNEY: “Yeah, exactly. Yeah. If you are in the right, and you’ve got the documents to prove it, I’d go after them. The other thing you can do is file a suit against them.

        PYRA: I can’t afford a lawyer, so –

        ROMNEY: Ah, just file it in small claims court.

        Romney was completely oblivious to the fact that the amounts involved are beyond the jurisdiction of small claims court, and most people can’t afford justice.

        It was another example of how out-of-touch our policy makers are when it comes to housing policy. Or worse, how they’re not out-of-touch, and know exactly what they’re doing.

        1. Deborah Goonan

          Many of our policy makers have direct ties to real estate development, investment, sales, and support services. Those ties can include current or past professional experience, or close family or business affiliations. They may even own investment properties, but often do not reside in HOAs.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.