Tag Archives: foreclosure

Waterlogged At Lemiere Condominiums

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guest blog by Nila Ridings

Condo owners in Chandler, Arizona are finding themselves under water, lots of water!

Irreplaceable family photos and damage to items stored in their garages, such as cars, are not their problem, says the HOA. The insurance company for the HOA says it’s not their problem, either. And the condo owners didn’t carry flood insurance. Whose problem is it? Well, it looks like that is going to be decided in lawsuits. (Oh! Here we go again!)

J. Roger Wood an attorney and supporter of HOA homeowners notes the owners did notify their HOA prior to the storm of drainage problems. Will that be sufficient to settle these claims? Or will the HOA just decide to spend the money that could be spent repairing the drainage problems on fighting these condo owners in court? Will failure to maintain the property that resulted in condo owners receiving personal property damage be enough to convince a jury?

What do you think?

This is probably an ideal time to remind readers that any time you are making a request of the HOA to always do it in WRITING and keep a copy. If you send an email, print a copy and keep it in a file.

(link to KPHO TV story on flood damage)

 

What Are The Implications Of This One???

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Regular readers of this blog know that I’ve preached from the street corners that an avalanche is coming which will send the American housing market into a massive tailspin. Billions of dollars will be lost and won. Ultimately, individual homeowners will be the big losers.

Remember the refrain? An avalanche starts with just a tiny imbalance, a molecule of ice falling from the crest of a snow ridge. But that tiny chip can hurl millions of tons of snow down a mountainside. Living in Colorado, all of us who love the outdoors have to be wary of this potential killer.

The Nevada Supreme Court might have just set off such a disaster. It ruled that a super priority lien, no matter how small, can destroy a first deed of trust. The implications for the Nevada housing industry are stunningly dismal. The court was narrowly divided. But the 4-3 majority ruled that a petty HOA lien can utterly wipe out the mortgage loan on a million dollar home.

A hundred dollar fine for a trash can left outside an hour after the deadline can be escalated into thousands of dollars in legal expenses and collection fees.

The boards of Homeowners Associations are cheering the news. This court decision now gives them unprecedented power to throw petty fines into the air to stifle any sign of dissent in a neighborhood. They’ll be able to grab million dollar properties and auction them off to fill the HOA budget.

Meanwhile, the boards of mortgage companies are now meeting to discuss two questions: Wouldn’t we be financial idiots if we ever loaned another dime to a Nevada homeowner? Or the alternative: How high shall we raise interest rates on every new mortgage to cover our expected losses?

Nevada! The nation’s focal point of HOA corruption is poised to do it all over again.

(link to Review-Journal article on court decision)

 

Wild Times in Southern Florida at Waterbridge Condominiums

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Egads, it’s just an average meeting of an average Condo Board. Some poor average shmuck who’s been insisting that the board repair the fire damage over his apartment gets taken to the cleaners. All the resident did was ask to see the Condo Association’s financial records…it seems there are no reserve funds to pay for the fire damage. The board president repeatedly tries to scratch this guy’s eyes out. Another former board president admits to a local TV crew that he’s harrassed and even pulled a gun on this same resident.

LOL! What a wonderful day it was when the video camera was invented!

(link to Local10 News story)

 

Story Behind Florida’s Epidemic of Hostile Condo Takeovers

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guest blog by Deborah Goonan

In a previous blog, I explained CAI’s conflicted stance on private property rights of condo owners. In this blog, I provide the back-story.

Prior to 2007, if owners wanted to terminate the condominium regime, Florida law stated that 100% of owners – and lien holders – had to agree to the termination and a specific plan for liquidation of all assets. (Governing documents could specify a lower threshold, but few did.) The main problem with unanimous consent was that, following some of Florida’s hurricanes which damaged a significant number of condo buildings beyond repair, it was difficult or nearly impossible to locate and obtain consent from every unit owner, thus delaying termination and redevelopment.

In 2006, the Florida Legislature passed a remedy to this problem by amending Statute 718: allow dissolution of condominium with 80% member vote of approval OR less than 20% disapproval, in the aftermath of a disaster that destroys a building beyond repair, as well as in the event of optional or voluntary termination. Governor Jeb Bush vetoed that bill, citing concerns about less than unanimous approval, and the likelihood of unintended consequences in the event of optional terminations.

In a letter from the former Governor dated Jun 7, 2006, Jeb Bush (R) states:

“Among the potential unintended consequences is that the bill would permit one owner (such as a developer) to purchase 80 percent of the units in a condominium and seek termination, with the ultimate goal of redevelopment, in the absence of economic waste or impossibility. A possible remedy to this situation would be to require one vote per person, regardless of the number of units owned.”

The following year, in 2007, the Legislature was presented with a slightly modified version of the bill, written with the assistance of West Palm Beach attorney and CAI member, Michael Gelfand. Senator Steven A. Geller (D) presented the Senate version of the bill. Public records indicate that Geller was selected as CAI FL’s Legislator of the year in 2002. The former Senator is now a shareholder at Greenspoon Marder Law, a firm that specializes in Land Use, Zoning, Lobbying and Gaming. Representative Elaine Schwartz (D) presented the House version. Schwartz’s husband, Marty is a prominent real estate attorney and partner in the law firm of Bilzin Sumberg Baena Price and Axelrod, LLP.  The 2007 version allowed for optional termination by 80% vote of approval, as long as less than 10% objected to termination. The bill also diluted rights of lien holders to approve the termination plan, based upon appraisals presented by the majority voting for termination.

Despite continued objections from parties who continued to be opposed to optional termination by less than unanimous consent, the bill was not modified to remove the possibility of optional termination under these terms. Nor did the Legislature allow for allocation of votes per person rather than per unit. The bill passed the Legislature with near unanimous approval (just one vote against), and with the “strong support of the Real Property Section of the Florida Bar.”

Prior to the bill being signed into law by then-Governor Charlie Crist (at the time, a Republican), Sarasota attorney Dan Lobeck, also a CAI member attorney, expressed concerns in a May 2007 article in the Herald-Tribune,  stating that the Voluntary (optional) Termination portion of the approved bill:

“…is simply a property grab by developers with assistance of the state.”

In the same report, Jack McCabe, CEO of McCabe Research & Consulting LLC, stated:

“If this [bill] goes through, we are going to see developers go in and be much more successful in acquiring existing condominium properties, especially on the waterfront,” and “some of those properties that are now more affordable will be leveled and very expensive multimillion-dollar units will be built on those sites. It will effectively render it impossible to find affordable condominium units in waterfront locations in Florida in the future.”

Of course, Developers and investors began to take advantage of the new Statute almost immediately.

It’s not as though the CAI and Real Estate industry proponents of this flawed statute provision, and the Legislature that overwhelmingly voted in favor of the bill, could not have foreseen such “unintended consequences.” The curious observation is that CAI’s member attorney firms are clearly divided on the issue of consent for Optional Termination of condominiums in Florida – and have been from the start -representing developers and investor-controlled Associations on one side, and individual owners on the other.

References:

http://www.becker-poliakoff.com/Files/7525_cu_2007_archive.pdf

http://www.ccfj.net/PB06SB1556veto.pdf

http://www.heraldtribune.com/article/20070511/BUSINESS/705110303

http://www.becker-poliakoff.com/Files/8934_cu_2014_v06.pdf

Where Does CAI Stand On Florida Condo Terminations?

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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.

References:

http://investing.businessweek.com/research/markets/news/article.asp?docKey=600-201408291903KRTRIB__BUSNEWS_31950_37969-1

http://www.caionline.org/info/provider/Pages/CAINationalServiceDirectory.aspx

http://www.caionline.org/govt/news/Political%20HeadsUp%20Public%20Document%20Library/CAIPublicPoliciesJan2013.pdf

https://www.facebook.com/Floridiansact

http://www.peytonbolin.com/recent-press/

http://online.wsj.com/articles/in-florida-condo-battles-play-out-1407260650

http://therealdeal.com/miami/blog/2014/08/29/condo-construction-financing-spigot-begins-to-open-in-south-florida/