Article Courtesy of The Orlando Sentinel
By Pul Brinkman
Published November 29, 2017
Jonathan Barr thought living at the Paramount on Lake
Eola would be a dream come true.
He estimates spending about $200,000 in custom cabinets, lighting, flooring
and other treatments for the downtown Orlando home he bought in 2006. But
this past July, Barr was forced to sell because a majority owner is
converting the entire building into apartments.
“I realize now, some idiots sat in a board room and decided to take my home.
That’s really what happened,” Barr said.
Such a move, called a condo termination, has prompted a lot of anger since
it became permissible in 2007 under a Florida law that has been tweaked
several times in an effort to make it more fair.
About 50 other unit owners at the 313-unit Paramount are in the same
situation, with a mid-December deadline for selling. Several owners the
Sentinel talked to said they weren’t necessarily happy about it, but the
termination made the best of a tough situation.
With rents in Orlando rising 5 percent a year, apartment units are in high
demand. Northland Investment Corp. bought the apartment portion of the
Paramount in May for $65.2 million, including an area leased by Publix and
Before 2007, every single condo owner in a building had to agree to
termination before it could be converted into an apartment. The law changed
during the collapse of the housing market so only 80 percent of unit owners
were needed to start the termination. If 10 percent of the unit owners
formally voted against the termination, it would be blocked.
The law was tweaked in 2015 and again in early 2017. The most recent change
says only 5 percent of unit owners can block a termination, but that doesn’t
apply to most condo buildings because it isn’t retroactive in the vast
majority of cases, said Jeffrey Margolis, a real estate attorney with Berger
Singerman in Fort Lauderdale.
Things could have been worse for Barr. Because he lived in the unit, he was
guaranteed to receive at least what he paid for it, which was $500,000 at
the peak of the housing market in 2006.
But people who owned units at the Paramount as an investor or a landlord,
such as Javier Camacho of Miami, didn’t have that guarantee.
He had purchased the unit in 2008 for $449,857. But the value of the unit
had plummeted, not just because of the recession, but also because the
building went into foreclosure and became mostly apartments.
Camacho sold his unit for $309,000, a loss of $140,000, to Northland soon
after it bought the building in May. Despite the lower price, Camacho, a
tech company executive, said he understands the situation.
“On my end, I think was treated well. It was the market forces that
determined the sale price,” Camacho said.
Camacho had posted the unit for sale repeatedly, but it was a tough sell.
Banks would not provide loans on the remaining condo units in the building
because it is primarily apartments. Part of Camacho’s deal with Northland
was to allow his tenant to remain under the existing lease until December.
Tenants are given an option to negotiate a new lease with Northland.
The company says it is dealing with the termination in accordance with state
law and the condominium documents. Unit owners who are investors will
receive the fair market value as determined by the independent appraiser,
said Matthew Gottesdiener, chief investment officer.
“We believe the values determined by the appraiser are higher than what an
owner could obtain in the current marketplace,” Gottesdiener said.
Waiting for a better price may have helped some unit owners, said Scott
Garstka, a realtor whose brother was a Paramount unit owner. He said his
brother was offered $285,000 by Northland early in the process.
“I sent it back to them and said, ‘Get real,’ ” Garstka said. According to
him, sale of his brother’s unit will close soon for $405,000, and he is
getting a few thousand more for reimbursement of association fees his
brother paid over the years.
“My brother said, this isn’t supposed to happen in America, where they can
just take your home away,” Garstka said.
Barr said he is now living in a more suburban setting, and is investing in
The most bitter point for him came as someone asked when his unit at the
Paramount would become available for rent.
“He knew how nice I had made the unit, and he had a friend that wanted to
live there, in my home,” Barr said.