Condo takeovers increased in 2024 — a possible escape for owners who face mounting monthly fees and spiraling special assessments. Condo buyouts or terminations need 80% of owners to agree to sell to a developer.

The Miami Herald spoke with three real estate experts who are at the forefront of these deals, including real estate developer Ian Bruce Eichner; real estate analyst and Condo Vultures founder Peter Zalewski; and Siegfried Rivera partner Lindsey Lehr.

Why condo buyouts are on the rise The three weighed in on what makes a condo ripe for termination:

1. A surface parking lot A surface parking lot indicates land is underutilized. Most newer buildings have parking garages to maximize a building’s footprint. 2. Concrete balconies with railings A condo with concrete balconies with railings implies the association lacks funding to renovate and install ones with glass, a modern look owners want these days. 3. Fewer than 100 units Condo buyouts require 80% consensus and the explicit objection of less than 5% of the unit owners. Developers who have attempted to buy out larger buildings have often faced hurdles and delays because unwilling owners. 4. Path of least resistance to terminate Condo terminations can be a complicated process, and developers like Eichner prefer if fewer votes are needed to approve a termination. “That’s the single biggest issue,” Eichner said, adding that his ideal state requirement would be 75% approval needed. The more votes required, the more likely it is that a deal falls through because of some residents dissenting and voting against the deal. The submission statement in a condominium act — a document stating the responsibilities and rights of the developer, association and owners — will often define what percentage of votes are needed to approve a buyout. If the document includes Kaufman language — “as it exists on the date here of and amended from time to time” — that means the current law requiring 80% of approval stands. However, Lehr said, if 5% of residents come forward and vote against the termination, then the deal can disintegrate.

Condo Vultures’ Peter Zalewski speaks during the Miami Herald and el Nuevo Herald’s Priced Out Of Paradise panel discussion at United Way Miami on Wednesday, Sept. 18, 2024, in Miami. The event gathered real estate experts, local leaders and media members as they discussed South Florida’s condo crisis.

 

5. Municipal zoning regulations
Developers prefer communities like the city of Miami, Zalewski said, over those with more restrictions and regulations like the city of Miami Beach. Developers often aim to build as densely as possible to cover their costs — land, labor, loans — and still make a profit. The more freedom that zoning provides them, the better and more profitable the project can be.

6. Location Waterfront remains the gold standard.
The most preferred sites are those on oceanfront sand, then anything on the bay on islands connecting the mainland to the beach. Sites on the mainland with bay views are third in the pecking order. And finally, sites on the river such as in Fort Lauderdale’s Las Olas neighborhood or Miami’s Miami River area.

7. Age
Developers look for buildings at least 30 years old, Lehr said, because it’s more likely those condominium associations face high condominium assessment fees, special assessments and looming reserves.