Article Courtesy of The Palm Beach Post

By Kim Miller

Published June 19, 2014

Owners in a Boynton Beach condominium community are suing a company that is trying to turn the development into apartments, saying they were “threatened” and told that they should sell to the company or lose their homes no matter what.
  
Via Lugano, which suffered huge drops in property values after the real estate bust, now has 90 percent of its units owned by the Newtown, Mass.-based Northland Investment Corp.
  
A state condo termination law gives the company the ability to turn the units back into apartments, but it must offer fair market value to owners or give them a share of the new converted complex in exchange for their units.
  
The Palm Beach Post first wrote about the owners’ dilemma in September when the company owned about 77 percent of the units. The lawsuit filed last week, says the firm now owns 90 percent.
   
“The acquisitionist would threaten the unit owners and scare them into believing that if they didn not sell their homes before the Plan of Termination was recorded, there would be no money left over to distribute to the remaining owners after termination,” the lawsuit says. “The acquisitionist also told remaining owners that the developer turnover was inevitable and that they would lose their homes no matter what they did.”
  
Many of the remaining owners bought their units at boom-time prices, meaning if they sold for fair market value, they could owe deficiencies to their bank.
  
Dale Domanick, who is named in the suit, paid $313,900 in 2006 for her unit. In 2013, its total market value was $74,000.
  
“Now we feel like our homes are being stolen from us, like we’re not even living in America,” Domanick told The Post last year.
  
Florida’s Condominium Act was amended in 2007 to make it easier to terminate a condominium, said attorney Donna DiMaggio Berger, executive director of the Community Advocacy Network, which represents community associations.

When a bulk buyer owns or is close to owning a majority of the units, it may use the termination rules to buy remaining units at fair market value or give owners a percentage share of the newly converted apartment complex in exchange for their units.

“The bulk buyer can proceed with the termination and the individual owners can’t do much to stop it,” Berger said. “It is just the risk of buying in an unsuccessful conversion project.”

The legal change had no sinister intention, said West Palm Beach-based attorney Michael Gelfand, who is a member of the Florida Bar’s Real Probate and Trust Law Section and serves as director of the section’s Real Property Division.

 
The target was aging condominiums in Miami-Dade County where owners, mostly older retirees, couldn’t afford vital repairs, and buildings severely damaged by hurricanes or other natural disasters.
  
“It was to allow owners an opportunity to recoup their investment when they were faced with reconstruction expenses that outstripped the value of their units,” Gelfand said.
  
Before it was amended, the law allowed for one unit owner to veto the entire takeover. Under the new rule the termination can be derailed if 10 percent or more of owners object.