Clear80° WeatherClear80° Weather

A Times Editorial

Editorial: Fix loophole in condo sale law

Tallahassee unwittingly opened the door seven years ago to allow private investors to force condominium owners out of their homes and leave them saddled with debt. The Legislature needs to fix this loophole.

Bloomberg News (2007)

Tallahassee unwittingly opened the door seven years ago to allow private investors to force condominium owners out of their homes and leave them saddled with debt. The Legislature needs to fix this loophole.

Florida has a long history of protecting homeowners. Creditors can't take a homesteaded property in bankruptcy proceedings. Homeowners get a break on property taxes. And Florida's Constitution is more explicit than the U.S. Constitution about when government can take private property for public purpose. But Tallahassee unwittingly opened the door seven years ago to allow private investors to force condominium owners out of their homes and leave them saddled with debt. The Legislature needs to fix this loophole, which is now affecting condo owners across Tampa Bay and Florida. If big money investors want to force condo owners out of their homes, they should at least have to cover their debt.

The culprit is a 2007 law that was aimed at helping condominium associations whose complexes were hurricane-ravaged or had deteriorated into substandard conditions. Often, the associations could be caught in limbo because they were unable to muster the unanimous owner vote needed to sell their property or make costly repairs. Among the problems: owners who couldn't be located to vote or a few holdout condominium owners unrealistic about the cost of repairs. So the Legislature changed the law to say that if 80 percent approve of the sale and fewer than 10 percent of owners disapprove, the sale can proceed. Then came the law's unintended consequences.

Now venture capitalists and other investors are using the law as they seek to convert condominium complexes into apartment rentals, which often includes significant tax advantages. The investors buy up 80 percent of the units and force the remaining owners to sell — often at less than they still owe the bank.

For those homeowners who bought at the height of the market, the result can be devastating. Not only do they lose their home, but they also can still owe money to the bank for the unsatisfied mortgage. Most often, this is occurring in complexes that were converted from apartments to condominiums at the height of the market, prior to 2008, only to see the fortunes turn as the economy failed.

Rep. Carl Zimmermann, D-Palm Harbor, has been trying to bring attention to this injustice for more than a year and is now joined by several other Tampa Bay legislators. Zimmermann called on Gov. Rick Scott last week to instruct the Department of Business and Professional Regulation to step in. But it's not clear what immediate authority the department has to prevent condo complexes from transitioning to apartment rentals, as the matter is only recorded at the state level after the fact. For now it appears the only recourse for condo owners is the courts.

But that shouldn't be the case going forward, even for condominium owners, who do sign away some interests when they buy. Investors seeking to make a buck on Florida real estate should not be able to take economic advantage of homeowners by forcing them to sell when they're not ready. The least the law should require is that mass buyers set fair prices and assume debt liabilities for condo owners forced to sell. Florida lawmakers opened the door to this exploitation; now they need to close it.

Editorial: Fix loophole in condo sale law 09/02/14 [Last modified: Tuesday, September 2, 2014 5:29pm]

    

Join the discussion: Click to view comments, add yours

Loading...