Developers say they are doing a service tearing down old structures and rebuilding

When Joe and Janet Dippell bought their oceanfront condo in 2008, they thought they would live there forever. The Bal Harbour, Fla., property featured its own restaurant and the Dippells’ 3,300-square-foot apartment boasted water views.


But over the past two years, local developers have been trying to buy each of the Carlton Terrace’s 88 units. They plan to knock down the property and build a development where they can charge premium prices for more units.

The Dippells and five other owners declined to sell. But the condo bylaws stated that if 80% of the unit owners vote in favor of selling, then everyone must sell. The Dippells moved out in November. They are now living in a house roughly half the size of their former condo and without the ocean view.

“They did well financially, but they still got kicked out of their home,” said their daughter Marjorie Mannix, speaking on behalf of her parents, who signed a nondisclosure agreement as part of their buyout. “They have to start over in their 80s.”



This process, known as condo termination, has cropped up across the U.S. But it has been particularly prevalent in Florida, where at least 400 buildings have experienced it over the past decade, according to the Florida Department of Business and Professional Regulation.


The beachside view from Carlton Terrace in Bal Harbour, Fla.

The Carlton Terrace condo property in Bal Harbour, Fla., is being targeted for redevelopment.
The frequency reflects the large stock of aging condo buildings in South Florida and the lack of developable land near the ocean. Some developers are buying out unit owners, tearing down the buildings and constructing new ones in their place. Related Group, Starwood Capital Group and Fortune International Group are among the developers partaking in condo termination.

Developers say that many of these condos are on prime land and that they are performing a useful service, offering owners market-rate prices. By tearing down decades-old properties and building new, they are often removing structurally unsound buildings.

Many unit owners are happy to sell. After a condo collapse in Surfside, Fla., killed 98 people, Florida passed a law that requires most condo buildings over 30 years old to undergo structural inspections. Those are often accompanied by assessments on condo owners that can exceed $100,000. Part-time residents, in particular, can be eager to take a check from a developer rather than come up with the cash to cover the assessment.

But some owners, especially older ones, oppose selling and having to find a new home in one of the country’s most expensive states to buy.

In many cases, they have little choice. A Florida statute says that once a developer acquires 80% of the units, it can terminate the building.

Condo documents that govern the building can often contradict the law, leaving much up to legal interpretation. While some condo bylaws require 100% of unit owners to agree to a sale for example, developers can often change those bylaws once they acquire a majority voting stake in the property.


The Fellmans fought a condo termination in Boca Raton, Fla.
“There’s definitely levers to pull once the prospective developer acquires a critical mass of units,” said Daniel Gielchinsky, a real-estate attorney who represents developers in these cases.

That is what happened to Howard Fellman, the lone holdout in a 176-unit condominium in Boca Raton. The bylaws at his association required a 100% threshold to terminate the condominium, he said. Scully Co., as the majority owner, voted to lower that threshold to 80% in February 2021. The firm then voted to terminate the condominium.

“We did what we’re legally allowed to do,” said Chief Executive Jessica Scully.

Mr. Fellman, 57 years old, took his grievances to court and lost. He is appealing the decision. “I think property ownership is a vested right, not one that can be voted away with a hostile investor-led condo board,” he said.

In Melbourne, Fla., Elfi Morch-Dionysius sold her condo after receiving a letter from the majority owners, she said. The firm paid her $180,000 for the unit, which wasn’t enough to pay for something comparable in the area.

“Anyone who’s being bought out will be bought out for a fair market value based on an independent appraisal,” said Eric Appleton, the attorney hired by the association’s board of directors. Mr. Appleton added that unit owners can seek their own appraisal to contest the amount and go through a dispute-resolution process.



Ms. Morch-Dionysius, 70, said she accepted the offer because the real-estate company wrote that if she stayed another year, it would reduce it by $20,000. She used all of her savings and took out a mortgage to buy a single-family home for $315,000.

“The longer I waited, the less I would get,” said Ms. Morch-Dionysius. “Other people got less.”

Tracy Doka, who owns a unit in the same complex, is one of six owners who voted against termination. Five of them have hired an attorney.

“It’s like a hostile takeover,” Ms. Doka said. “Never buy a condo in Florida, that’s all I can say.”


South Florida is challenged with a lack of developable land near the ocean.
Write to Deborah Acosta at deborah.acosta@wsj.com


LINK: https://www.wsj.com/articles/f...e-firms-240845c5?cx_

I've often wondered about the lack of two way streets in some areas of our legal system.

Take gay wedding cakes. Why would it be legal to force a cake maker to sell a cake, but not legal to force a couple to purchase one?

And now Florida condos. Why is it legal to force somebody to sell their property, but not legal to force a developer to purchase it?

If it's legal on one side, it should be legal on both. I suppose the lesson is to protect yourself, don't own anything that isn't 100% owned by you.

So they signed a contract which stated that if 80% of the residents voted to sell, they'd have to sell. Now they're pissed and don't want to sell after >80% of residents voted to sell.

Do I have that right?

I think this falls into the "sucks to be you, but you asked for it" category.

I had my taste of condo life and would never do it again. Luckily I was able to sell mine and get out and made out on the deal.

quote:

So they signed a contract which stated that if 80% of the residents voted to sell, they'd have to sell. Now they're pissed and don't want to sell after >80% of residents voted to sell.

Do I have that right?

^^^^^^^^^^^^^^
Nope.
Condo documents that govern the building can often contradict the law, leaving much up to legal interpretation. While some condo bylaws require 100% of unit owners to agree to a sale for example, developers can often change those bylaws once they acquire a majority voting stake in the property.

The Fellmans fought a condo termination in Boca Raton, Fla.
“There’s definitely levers to pull once the prospective developer acquires a critical mass of units,” said Daniel Gielchinsky, a real-estate attorney who represents developers in these cases.

That is what happened to Howard Fellman, the lone holdout in a 176-unit condominium in Boca Raton. The bylaws at his association required a 100% threshold to terminate the condominium, he said. Scully Co., as the majority owner, voted to lower that threshold to 80% in February 2021. The firm then voted to terminate the condominium.

quote:

Originally posted by ZSMICHAEL:

quote:

So they signed a contract which stated that if 80% of the residents voted to sell, they'd have to sell. Now they're pissed and don't want to sell after >80% of residents voted to sell.

Do I have that right?

^^^^^^^^^^^^^^
Nope.
Condo documents that govern the building can often contradict the law, leaving much up to legal interpretation. While some condo bylaws require 100% of unit owners to agree to a sale for example, developers can often change those bylaws once they acquire a majority voting stake in the property.

The Fellmans fought a condo termination in Boca Raton, Fla.
“There’s definitely levers to pull once the prospective developer acquires a critical mass of units,” said Daniel Gielchinsky, a real-estate attorney who represents developers in these cases.

That is what happened to Howard Fellman, the lone holdout in a 176-unit condominium in Boca Raton. The bylaws at his association required a 100% threshold to terminate the condominium, he said. Scully Co., as the majority owner, voted to lower that threshold to 80% in February 2021. The firm then voted to terminate the condominium.

Then the question can just be restated, did the condo docs allow for their amendment of vested rights, answer yes. Then again he got what the contract allowed, he just didn't think it would happen and it did.

OK. To me it says have an attorney read your contract before you sign. My hunch is this sort of clause is in fine print on an addendum. It does not affect me in the least, but again reiterates getting legal advice. I did so before renogiating my office lease. I added several clauses to my benefit.

All I have to say about this is this: If you think used car salesmen, the representatives of any other business or profession, or politicians are slimy, just try dealing with a developer, sometime.

After that the others will seem tame, by comparison.

A) They got the rights they paid for.

B) Condos, in large part, are disposable buildings -especially ocean front. They are not designed/constructed as permanent structures.

C) Unless I’m missing something, the hold-outs lawsuits are pretty well the definition of frivolous.

quote:

Originally posted by ensigmatic:
All I have to say about this is this: If you think used car salesmen, the representatives of any other business or profession, or politicians are slimy, just try dealing with a developer, sometime.

After that the others will seem tame, by comparison.

I totally agree.

quote:

Originally posted by ensigmatic:
All I have to say about this is this: If you think used car salesmen, the representatives of any other business or profession, or politicians are slimy, just try dealing with a developer, sometime.

After that the others will seem tame, by comparison.

That isn’t true of all developers, but it may well be true of a majority of them.

I’ve always felt condos are a scam.you only own the air between 4 walls, the ceiling, and a floor. Unless I was filthy rich, there’s no way I’d ever “own” one.

Or don't want do do all the maintenance on a house yourself. And in a lot of areas you can buy a condo for much less than a house.

quote:

Originally posted by gearhounds:
I’ve always felt condos are a scam.you only own the air between 4 walls, the ceiling, and a floor. Unless I was filthy rich, there’s no way I’d ever “own” one.

quote:

To me it says have an attorney read your contract before you sign.

Words to live by.

"The large print giveth, and the small print taketh away."

It is a good way to live on the cheap as long condo fees are reasonable. It is like apartment living but once paid off you are not tossing away money every month on rent.

quote:

Originally posted by gearhounds:
I’ve always felt condos are a scam.you only own the air between 4 walls, the ceiling, and a floor. Unless I was filthy rich, there’s no way I’d ever “own” one.

Having a developer buy out the property may be the best thing for many of the owners considering the cost of future repairs.

The article of course makes it sound like it's all elderly owners being tossed to the street without enough money to relocate but that's not the case for many of the owners.

Fact is in many condo building, the units are not a primary residence, a lot are vacation/part time residents or rental properties. These are likely the initial sellers, eager to take a quick profit and if there are future assessments for reconditioning the property coming, getting out before getting assessed for those future expenses.

With the collapse of the Condo in Surfside, the game has changed, rules and enforcement on condos and associations are different and for good reason, associations are going to have to address structural issues and assessments could eat up all or most of a units equity or residents savings. A developer buyout provides market price revenue without the offset of an assessment expense.

Oceanfront property is a different animal, the amount of upkeep, maintenance, continual and major repairs are significantly more expensive than a home in Kansas.

Salt air and water is extremely corrosive and damaging.