Article Courtesy of The Palm Beach Post

By Kimberly Miller

Published September 5, 2013

BOYNTON BEACH --  All summer they’ve been leaving, one by one, sometimes in hushed deals shielded from pubic record. The Polish couple in unit 303. The 66-year-old in who thought his little condo at Boynton Beach’s Via, Lugano would be the last home he ever bought.

 
By July, even the lone homeowner representative on the condominium board had sold out, stranding the remaining 80 owners at the Congress Avenue condo complex with no voice against a corporation 280 units strong and gaining.

 
The serene, if average, Via Lugano condominium began life as an apartment complex. It was converted to condos during the heady days of real estate when two-bedroom units were selling for upward of $300,000.

  
Now, with Via Lugano values down as much as 75 percent, the Newton, Mass-based Northland Investment Corp. owns the majority of units, turning the community back into apartments. Remaining owners, many who are desperately under water on their mortgages, said they are being nudged out.

  
“Don’t be the last one to sell,” is what owner Jordan Greenfield said he was told one day during a visit to the main office on an unrelated matter.

  
“They told me Northland is buying up everything, and I should act fast to get out,” said Greenfield, who is tens of thousands of dollars underwater.

  
If they don’t sell, the remaining owners fear they will be forced out in a legal maneuver that would give them only fair-market value for their homes if 80 percent of owners agree to terminate the condominium.

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.

VALUES PLUMMET

  
Northland has about 77 percent of the units, and has picked up at least three more this month that aren’t yet listed with the Palm Beach County Property Appraiser.

  
“We all bought here, and these were supposedly our homes, the American Dream and all that,” said Dale Domanick, who paid $313,900 in 2006 for her unit.

  
Its 2013 total market value is $74,000.

  
“Now we feel like our homes are being stolen from us, like we’re not even living in America,” she said.

 
Northland, which owns dozens of apartment complexes in nine states, did not respond to several phone calls and emails requesting comment for this story.

 
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 Net work, which represents commun-ity 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 Re al 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.

  
Via Lugano owners say they have 39 on their side now - a little more than 10 percent. But if the price is right, even the stalwarts may sell out. And if Northland were to lose, it could try again.

 
“Someone’s home is very important to them and we have dedicated ourselves to protect property rights and homesteads,” said Gelfand, adding that owners can file a court objection to the termination and ask for a judge’s ruling.

 
“But what this comes down to is sometimes there needs to be economic reality and a reset.”

 
While condo terminations are not yet a common occurrence, Grant Stern, president of the Bay Harbor Islands-based company Condo Terminators, said there have been dozens statewide.

  
Stern orchestrates the terminations, working with unit owners and corporate interests. He said he is working on a deal now in Boca Raton, but didn’t want to name the company.

  
“People are afraid of this, but it’s intended to help situations that are impractical,” Stern said. “The whole goal is to fix problems that have become unsolvable.

 
In 2005, as the housing market peaked, Tarragon Corp. of New York bought the Via Lugano community for $74 million and converted it to condominiums. It was a popular maneuver at a time when buyers were scrambling for properties. Renters were told to buy or move. 

FEW ARE HOMESTEADS

 
But real estate was on a collision course with the pending Wall Streetfailure and by 2008 the units had stopped selling. Troubled Tarragon sold Via Lugano and five other properties in Florida and North Carolina to Northland for $156 million.

  
The deal included 251 of Via Lugano’s 364 units.

  
Beginning in the fall of 2011, the Northland company 1400 Via Lugano, LLC began buying units from individual owners, according to official county records.

   
Just 39 of Via LUgano’s 364 units have homestead exemptions on them, meaning the owner considers it a primary residence.

  
The majority of sales completed this year reflect a sales price of $10 on the deed and have no amount listed for documentary stamp taxes. Instead, the deed notes that the taxes were send directly to the Florida Department of Revenue.

  
It’s an unusual move that John Thomas, director of residential appraisal for the Palm Beach County Property Appraiser’s Office, said he has seen only one other time in 20 years. But it blocks owner from knowing the sale price of their neighbors’ units.

 
“Universally, doc stamps have always been reported on and printed upon the recorded deed,” said Gregory Clark, a title and real estate attorney in Clearwater. “I’d think the property appraiser needs this information to do its job in coming to fair and just value for annual property tax assessments. As well, private appraisers should be upset that they cannot access this kind of basic information.”

  
Department of Revenue spokesman Renee Watters said the documentary stamp records are not available to the public. The information can be seen by the property appraiser’s office on request.
Boca Raton real estate attorney Marlyn Wiener, who reviewed several of the Via Lugano deed transfers, also found that the mortgages of at least two former homeowners were paid off “presumably by 1400 Via Lugano.”

 
“From the public records, you cannot tell if the owner is receiving any cash consideration for giving the deed,” Wiener said. “Are they simply walking away and being relieved of mortgage debt? No way to tell.”

  
After some persuading by Northland representatives, Greenfield agreed to unload his unit in a short sale. He said he owes about $198,000 and Northland offered $124,000. The bank rejected the sale saying Greenfield makes too much money and couldn’t prove a hardship, he said.
  

IT'S MY TIME TO GO
 
But it’s not always about money. Erica Almonte’s daughter bought the unit she lives in through a short sale, spending just $65,000 in 2011. Almonte said her daughter had gotten phone calls and emails pushing her to sell, but Almonte likes the community and wants to stay.

 
“I was looking forward to moving here and I had peace of mind here,” Almonte said. “Now I have tears in my eyes and stress.”

 
Steven Gardner, the former homeowner representative on the association board, was reached this month by the Palm Beach Post as he was moving out. He bought his unit in January 2007 for $292,900, and said Northland has improved the community, putting in new mailboxes and adding security.

 
Gardner’s unit had a market value of $69,000 last year. He declined to say how much Northland paid.
     
“I got no where near what I paid for it, I can tell you that,” Gardner said. “I can’t really comment about whether what’s happening is good or bad, I just know it’s my time to go.”