Florida should not allow billion-dollar real estate companies to bully condo owners into selling their homes, especially at unfair prices. But that’s exactly what’s happening around the state and in the Tampa Bay area thanks to a faulty law. Legislators have tried to mitigate the problem, but if they really care about property rights and fundamental fairness they have to do more.
Lawmakers appeared well-intended in 2007 when they passed legislation that lowered the portion of condo owners needed to approve repairs or terminate a condo association from 100 percent to 80 percent. The idea was to ensure that condo associations could respond quickly to damage caused by hurricanes and other catastrophes, or disband if the complex was beyond repair. But there were unintended consequences — well-healed real estate companies saw an easily exploited loophole. The 80 percent threshold made it easier to take control of condo complexes, even ones never affected by storms, and then force any stragglers to sell at low prices.
Condo owners, many of them seniors, complained about high pressure tactics to get them to sell, according to a recent Tampa Bay Times report. So many people protested that in 2015 the Legislature tweaked the law to require “bulk buyers” to pay at least what the owner had paid, but only if the owner had bought the unit from the original developer and had a homestead exemption on the property. That doesn’t go far enough. Every condo owner forced to move should be offered at least what they paid. They aren’t looking to leave. It’s a major disruption to their lives. Why should they pad an investor’s bottom line by having to accept unfair offers?
This isn’t about cleaning up dilapidated complexes. The Lansbrook Village development in North Pinellas featured in the Times report is tidy and surrounded by green space and lakes. In many cases, the developers target well-maintained complexes with low- to mid-range prices that they can convert from condos to apartments. One expert told the Times that bulk-buyers already own at least half the units in about 30 condo complexes in the Tampa Bay area, making them likely candidates for condo-to-apartment conversions.
State law now requires anyone looking to terminate a condo association to explain why it would be good public policy. When a hurricane demolishes a complex, terminating a condo association makes sense. Otherwise, the rubble could sit there for years. But converting a perfectly good condo complex to apartments does a lot more to enrich developers than it does to serve the public interest. The provision, however, is too new to know whether it will protect condo owners who don’t want to move.
If the public policy requirement fails to rein in bulk buyers, lawmakers should change the law again to ensure it is used only after catastrophes, not any time investors spot an opportunity to gobble up units at a low-ball price and make a few bucks. No one who owns a home and makes regular mortgage payments should get booted out solely so a real estate company can cash in.