Tampa Bay couple in 'awful situation,' forced to sell as condo converted to rental

Nadia Le Monte, left, and her husband, Tyson, with their daughters Maica, 14 months, and Divya, 3, were told they 
would get just $127,000 for their condo at Bay Isle Key Apartments in St. Petersburg, $70,000 less than they owe.
Nadia Le Monte, left, and her husband, Tyson, with their daughters Maica, 14 months, and Divya, 3, were told they would get just $127,000 for their condo at Bay Isle Key Apartments in St. Petersburg, $70,000 less than they owe.
Published Dec. 15, 2015

If someone forces you to sell your property, shouldn't they be required to give you at least as much as you paid for it? • That's what Nadia and Tyson Le Monte thought when they learned they would have to sell their St. Petersburg condo — bought in 2006 for $254,900 — because the complex is being converted to rentals. • The couple were stunned, therefore, when told they would get just $127,000. That is $70,000 less than what it would take to pay off the mortgage. • Now Le Monte, a former Marine and government contractor in Iraq and Afghanistan, fears he may have to drop out of college and go back to work even though he is under treatment for post-traumatic stress disorder. • Says his wife, a pharmacist at the Bay Pines VA Medical Center: • "This is such an awful situation to be in.'' • The Le Montes are among the hundreds of Florida condo owners discovering that a new law designed to increase their rights in condo-to-apartment conversions won't help them nearly as much as they hoped.

Signed by Gov. Rick Scott in July, the law as first envisioned would have guaranteed that all owners who bought from the original developer would be compensated for the full purchase price if the complex turned rental.

But shortly before the Florida House voted on the measure, it was amended to provide full compensation only for owners with homestead exemptions. That was a blow for people who bought their condos as second homes or those like the Le Montes, who rented out their two-bedroom unit after moving to a bigger place when their family began to grow.

Tallahassee lawyer Peter Dunbar, an expert on condo law, said the compromise was necessary to save the measure from defeat.

"Our (state) Constitution says that homesteads are special and the Legislature can treat them specially,'' Dunbar said. "You can't make that same argument for a second-home owner or a flipper or a renter. You probably couldn't have solved 100 percent of the problems, so faced with the dilemma of losing it all, this was the best choice. Otherwise even the homestead folks would have lost (protection).''

The Le Montes' condo is in Bay Isle Key, a 370-unit complex in north St. Petersburg near 1-275. It is one of hundreds of Florida condo developments that investors began eyeing for conversion to apartments as the foreclosure crisis created a soaring demand for rentals.

But that was years after Nadia bought her condo, never realizing she could one day be forced to sell it at a huge loss.

In 2006, then single, she moved from Miami to St. Petersburg to complete her residency in pharmacology. At the time condos were in demand, and Bay Isle Key, built as a rental complex in 1998, was being converted into condominiums.

"I knew the market was high, but Bay Isle probably was the prettiest place I'd seen in that area,'' Le Monte said. "It had a lot of upgrades and was really pretty with all the flowers and trees and lots of great amenities.''

In 2011, she married Tyson, who had been stationed as a Marine in the Horn of Africa when he badly injured his foot in a training exercise. He received a medical discharge and, after partially recovering, did three tours in the Middle East as a defense contractor for commands headquartered at Tampa's MacDill Air Force Base.

"We started talking about having a baby and said, 'This is not going to work anymore,' '' Nadia Le Monte said of their small condo. "We couldn't sell because the market had gone down so much around 2011.''

Instead, they found a house they could afford in Ellenton and rented out the condo, losing the homestead exemption. The rental income and a loan modification saved them from foreclosure; many other owners in Bay Isle Key were not so fortunate.

With prices at rock bottom, a Chicago real estate investment company bought hundreds of Bay Isle Key condos and began renting them out. The same thing was happening in many other parts of Florida as investors took advantage of a 2007 change in Florida law.

Before then, major repairs or termination of a condo association required the approval of 100 percent of the unit owners. But as foreclosures and two busy hurricane seasons left many units damaged and vacant, the Florida Legislature in 2007 lowered the threshold to 80 percent.

"All these dilapidated old condos were harmful for the economy, but then you had one or two people holding out and saying, 'Let's not terminate my condo association,' " said Tampa lawyer Robert Stern, who specializes in real estate law. "But now the economy improves and some talented developers figured out this loophole (in the law) and came in and started buying up units.''

When bulk buyers acquired 80 percent of the units, they could terminate the condo association, convert the complex to lucrative rentals and force individual owners to sell and get out. Since the 2007 change in law, 272 Florida condo developments with a total of almost 20,000 units have terminated their associations. Among them were 30 in the Tampa Bay area with a total of 4,000 units.

State records do not show how many of those complexes turned rental. Lawmakers, however, had heard enough complaints by this year to consider a bill providing more rights for owners opposed to conversion.

Rep. Chris Sprowls, a Palm Harbor Republican who introduced the bill, wanted all owners — homesteaded or not — who bought from the original developer to be paid the full amount of their purchase price.

"There was some push-back from people that it would basically halt development so that was one concession we had to make,'' Sprowls said.

As a result, the new law says owners without a homestead exemption will be paid the current fair market value, not what the unit cost when they bought it from the developer. In many cases, today's market value is far less than what a condo originally cost at the peak of the boom.

On Aug. 27, the bulk buyers of Bay Isle Key won a vote to terminate the condo association and force the remaining owners to sell by Dec. 1. The $127,000 offer to the Le Montes is half of what the unit cost and would leave them owing $70,000 for a property they no longer had.

The couple, parents of two little girls, say that would upend their lives.

Tyson Le Monte, 39, recently began treatment for PTSD caused by his years in Iraq and Afghanistan, where he was shot at and nearly hit by a mortar. Using his VA benefits, he has been studying for a degree in natural medicine at a Sarasota college.

Now, the Le Montes fear, he will have to end his treatment, drop out of school and find a job so they can try to pay the $70,000 they still owe on the condo mortgage.

"If we're not able to pay that off or get what was paid for (the condo), we ultimately are going to have to sell our house,'' he said. "I don't see any positive outcome.''

Forcing condo owners to sell against their will — especially if not for a public purpose, like getting land for a new road — raises a host of legal issues. Does it breach the contract between the owner and the original developer or the owner and the bank? Can a law enacted in 2015 be applied retroactively to a condo bought in 2006? Does taking someone's home violate the Florida Constitution's ban on the forced sale of a homestead?

Dissenting owners in other Florida condo communities have challenged apartment conversions, but most of those cases have been settled confidentially.

"There was not a clear case that gives us clear direction from a high court of authority,'' said Stern, the Tampa lawyer. "There are several pending cases but none that answer all of the questions and give us guidance.''

Dunbar, who advised on the drafting of the new law, said it contains provisions that might help people like the Le Montes, who paid top dollar but aren't eligible for full compensation because they don't have a homestead exemption.

Dissenting condo owners can request a hearing before a neutral arbitrator if they think mistakes were made in the vote to terminate a condo association or in the valuation of property.

"We thought that rather than force these people to court when they're maybe dealing with a bulk owner with plenty of money, let's make a forum available where an average group of owners can fight,'' Dunbar said.

The new law also requires that all first mortgages be satisfied before a condo association can be terminated and dissenting owners forced to sell. Dunbar acknowledges that the law is not clear on what happens if the individual owners are unable to pay off their loans.

"Does the bank take the hit? Is the bulk owner going to have to get everybody's mortgages paid off? That's the kind of thing you would take to arbitration.''

In addition to the nearly 300 Florida condo associations that have been terminated since 2007, other complexes are on the verge of full conversion to rentals, including Tampa's 1,000-unit Grand Oasis at Carrollwood. But Dunbar expects condo-to-apartment conversions to slow as prices begin to rise.

That's no consolation for the Le Montes and others in their predicament.

"It's not fair, it's wrong in every way,'' Tyson Le Monte said. "We're counting pennies, we're more in debt every month. My wife was trying to do everything right, she was always on time with her mortgage payments. But these big corporations, they don't care about the little guy, though it's peanuts out of their pocket.''

Contact Susan Taylor Martin at or (727) 893-8642. Follow @susanskate.