Condo, Strata and HOA News

Category Archives: Orlando

Condo to Apartment Conversion Forces Owners to Sell

All condominium legislation, anywhere, includes a clause on dissolution of the condominium and doing something else with it. The primary use of this legislation is proper and quick handling of condominium that has suffered catastrophic failure (fire, storm, structural failure). If the building is unsafe to live in the owners can choose to sell the property instead of rebuild.

The clause can also be used when the majority of units (often 90%+) chose to disband for other reasons. In Orlando, state legislation in the last four years has made condominium dissolution easier, and some failed condominium developers have bulk sold their units to investors that are dissolving the condominium and turning them into rentals.

For the Element at MetroWest, Orlando, this is exactly the case. An investment group now owns about 70%+ of the 328 units and have moved to turn the building private.

For owners that still remain, they have little choice. The investors can give them part ownership in the new endeavour and boot them, or give them fair market value and boot them. The only problem is units have devaluated by 71% – but the mortgages remain the same.

Owners won’t have much recourse. While some will fight it, it is likely they will only be fighting for a slightly better market valuation or extra payment to move.

I have to agree – based on the immense amount of stories that feature massively empty complexes, or non-paying owners – a conversion to apartments may keep the building, neighbourhood and tax rolls maintained.

I have always encouraged condominiums to foreclose on delinquent owners of condominium fees – because the building must be maintained and the other, responsible, owners protected from another’s negligence. In this case, we have owners – responsible and fee paying owners – that none the less are being gravely injured now by terrible developers who were unable to sell the product they created. And those few responsible owners that bought are now being harmed anyways.