Research Investor Ownership in Condo Association Before Purchase

LHermitage-CondosA change made in 2007 to the Florida Condominium Act could result in a condo unit owner being forced to sell their unit involuntarily.  Shocking to think that you could lose your home without any legal recourse.  But that is currently how the law is written.

If a real estate investment company is able to acquire 80% of the ownership of the condominium, or can get 80% of the owners to agree, the condo association can be dissolved.  Before the law was changed in 2007, a condo association required 100% of the owners to agree on dissolution. Since the building and land and all amenities are owned by the association, the owner now can only claim ownership of their individual unit.  Because of this, owner’s are typically offered 30-50% of what they paid for their unit, and they must sell, no choice.

This law was vetoed by Jeb Bush, but signed into law by Charlie Christ. “This bill, in its current form, may cause unintended consequences that could deprive condominium unit owners of their rights to remain in their units without adequate procedural safeguards,” wrote Bush in his veto.  Governor Scott has asked the Department of Business and Professional Regulation, which regulates condo associations, to “review the matter thoroughly and develop recommendations for how we can work with the Florida Legislature in the upcoming session to help Floridians negatively affected by this law.”

If you are thinking about making a condo purchase, you can ask the condo association if there is an investment company that owns a large percentage of units in the building, how many units are in foreclosure, the percentage of owners in arrears in payments, as well other information about the financial and ownership position of the association.  Due diligence in a condo purchase requires a higher level of detail, as you are buying into a community of owners, a non-issue when purchasing a single family home.

For more information on this story, check back here for updates, and read more here.