One of the dangers of living in Florida is the weather. Besides the high humidity which can play havoc on one’s body and a home, there is also the threat of hurricanes and tornados. I recall watching the news after Hurricane Andrew swept across the Florida peninsula in 1992. It was a category 5 storm with winds up to 175 mph. Miles and miles of Florida were flattened. Homes, trees and anything that stood above ground was destroyed. What I saw reminded me of the images of Hiroshima and Nagasaki, Japan after the dropping of the first atomic bombs.
The damage from a hurricane can be devastating in more ways than one. In addition to having your home and possessions destroyed, it can also financially ruin a family if they don’t have the proper insurance coverage and hurricane insurance in Florida is not cheap. All too often, the damages physically and financially are too much for many homeowners who are forced to just walk away from the ruins.
In response to this, Florida law makers passed a law in 2007 that allowed the termination of a condominium agreement if 80% of the condo owners voted in favor of it. Prior to 2007, it took 100% of the condo owners to approve the termination. The purpose behind the law was to allow for the demolition and reconstruction of storm damaged condominiums.
However, large corporations are taking advantage of the 2007 law and buying up condos for less than half of what they are worth. Since 2007, 235 condominium complexes have been purchased by large corporations, but only a few were due to hurricane storm damage.
Shortly after the passage of the law, the home industry tanked and Florida was one of the hardest hit areas. This has also contributed to the reason many condo complexes are being bought up and converted to rental apartments, forcing remaining condo owners to sell their condos for far less than they paid or be evicted.
This is what’s happened to condo owners in the Madison Oaks development in Palm Harbor. Originally, the complex was rental apartments. In 2006 they were converted to condos and the developer sold about 50 of the 250 units. Then the housing market collapsed and many of the condos could not be sold so they were rented out instead.
A year ago, a group of New York investors calling themselves Madison Oaks Partners purchased all of the rental units giving them 80% ownership of the entire complex. According to the 2007 law, they had the legal right to terminate the contracts of the remaining condo owners, which is exactly what they have done.
Jackie Shafer is one of the condo owners that have been notified to sell or vacate. Due to the housing market issue, her condo is worth less than what she originally purchased it for. She still owes $90,000 on her mortgage but the Partners have only offered her $40,000 for the purchase of her condo. That would leave her with another $50,000 that she still has to pay the mortgage company on top of paying for another place to live.
Stephanie Krasowski is another condo owner that feels she is being taken advantage of by the investor group. She purchased her condo in 2007 for $162,900, just prior to the housing crash. The investors have offered her only $50,000 for her unit. She has filed a lawsuit against the investors and hoping to be able to keep her condo. Krasowski’s suit is also challenging the legality of the 2007 law that is allowing companies to strip condo owners of their homes.
“223 complexes have already been terminated in the last seven years, and only six were due to the original intent of the law, which was economic waste or natural catastrophe. That leaves 217 complexes. That’s approximately 10,000-plus families losing their homes for the financial gain of a bulk buyer.”
On the national news yesterday I heard that over 17,000 Florida residents have lost their condos since the 2007 law went into effect. That has prompted at least one Florida lawmaker to work towards changing the law to only make it apply to storm damaged properties and prevent the further purchasing of people’s homes by large greedy corporations.
I don’t know if any other states have laws similar to the one in Florida being used to strip people from their homes, but if you are considering the purchase of a condo or already own one, you may want to find out exactly what the laws are in your state. If you live in Florida and own a condo, you may want to weigh your options now before you find yourself in the same situation as Shafer, Krasowski and the other few condo owners in Madison Oaks. Frankly I think it best to just avoid living in Florida altogether, but that’s just me.