Owners fight condo takeover in Boynton Beach

Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published June 21, 2014

 

A dwindling alliance of Boynton Beach condo owners is fighting the takeover of their community by a company they say is bent on buying them out and turning their homes into apartments.

About 20 owners in the 364-unit Via Lugano complex filed a lawsuit last week in Palm Beach County in an effort to stop a Newton, Mass.-based company from using a state “condo termination” law to force them to sell their units for fair market value.

 

The firm, Northland Lugano, LLC, has been on a buying spree and now owns an estimated 93 percent of the condominium’s units. According to a 2007 Florida condo law amendment, a condominium can be dissolved if 80 percent of owners agree to its termination.

Many of the remaining owners bought their units at the height of the market and would only get a fraction of what they paid if Northland buys at current prices. They may also suffer a blow to their credit and finances if they have to execute a short sale.

“They are just trying to get our homes as cheap

 Via Laguna in Boynton Beach


as they can,” said 79-year-old Helen Weinschenk, who bought her 1,280-square-foot unit in 2006 for $329,000. “I like it here, and I don’t want them to push me out.”

The Palm Beach County Property Appraiser lists Weinschenk’s unit’s market value at $79,000.

Calls and emails to Northland were not returned Monday or Tuesday.

The Palm Beach Post first wrote about Via Lugano in September when unit owners still held a slim majority. Last week’s lawsuit claims owners were “threatened” and “scared” into believing that if they didn’t sell before a termination plan was filed, there would be no money left to distribute to holdouts.

“They kind of badgered people into selling,” Weinschenk said. “All the neighbors I was close with have gone.”

When a bulk buyer owns or is close to owning a majority of a condominium’s units, it may use the 2007 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 2007 amendment was aimed at giving owners a chance to recoup some of their investment when faced with overwhelming reconstruction expenses that outstrip the value of their property.

It was a good idea, but created too many loopholes, said Jan Bergemann, a DeLand resident who has worked for HOA reform as president of the grass-roots organization Cyber Citizens for Justice.

“Those loopholes are now being used to kick people out of their homes,” Bergemann 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.

The lawsuit filed by Via Lugano owners says it became a condominium prior to the 2007 legal change, and therefore is only subject to the law as it was written before the amendment. The lawsuit also says the Florida and U.S. constitutions are being violated when an owner’s “right to acquire, possess and protect property is restricted.”

“It’s scary to think of what can happen when any developer can remove people from their homes and do what they want with the property,” said attorney Michael Mayer, who is the representing Via Lugano homeowners. “Some of these owners spent their life savings buying their units and they just want to be at peace in their home.”

Harry Feldman, 92, bought his unit in 2006 for $277,900. Feldman, who uses a walker to get around, is adamant he’s not leaving.

“The property I’m in doesn’t have any steps, and I’m keeping it. I’m not going to sell,” he said.

Condo terminations are becoming more common as associations struggling with foreclosures and back dues face mounting maintenance debt , said Grant Stern, president of the Miami-based Condo Terminators. Stern orchestrates terminations, working with unit owners and corporate interests.

He said it’s an emotional situation, but the reality is Via Lugano’s bubble sales prices may never return.

“There is no recovery waiting in the wings for them,” Stern said. “They are forced to realize their gains and losses.”

Stern said he doubts the lawsuit will be successful, and even if it is, the developer will just change tactics and try again.

“It’s not the easiest case,” said Mayer, the homeowners’ attorney. “But just because it’s not easy, doesn’t mean it’s not a good case.”

 

About the law

A 2007 change in Florida law made it easier for bulk buyers to take over a condominium.

When an entity owns, or is close to owning, a majority of units, it can file a plan to terminate the condominium. It needs 80 percent of the unit owners to vote in favor of the termination with not more than 10 percent dissenting.

If approved, owners can be forced to sell at market value or get a share in the apartment complex.

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