Posted Aug 07, 2014 11:15 am CDT
A change to Florida law that makes it easier to change condo buildings to apartments has spurred litigation by owners who object to the forced sale of their units.
Developers in buildings where many units remain unsold are using the law to reclaim units and rent apartments, the Wall Street Journal (sub. req.) reports. Developers are taking advantage of the change partly because of the difficulties of making improvements to common areas that require approval and capital from condo owners.
The Florida law allowing condo owners to terminate their condo status was originally intended to allow for quick sale and rebuilding of condominium complexes damaged by hurricanes, the Wall Street Journal says. After a unanimous vote, condo units could be sold to developers who repaired and rented them. But a single holdout could block the change.
A 2007 amendment sought to battle the holdout problem by allowing termination of condo status with approval of only 80 percent of the condo owners, the story explains. Ten percent of the owners could block the change by objecting. The amendment also allowed termination of condo status for undamaged as well as damaged buildings.
Holdout owners after condo status is revoked would have to be paid the fair market value for their units. But the downturn has caused big losses in condo value. One person who has sued to block termination is 27-year-old Ileana Paan, who paid nearly $310,000 for a two-bedroom condo in Boynton Beach that was recently appraised at $74,000.
“This is a nightmare,” Paan said told the Wall Street Journal. “It has emotionally debilitated me. I get so angry. How could I lose this place? It’s mine, for crying out loud.” The developer withdrew its termination application after the newspaper contacted it for comment, the article says.