Florida condominium owners in danger of losing their homes are making a final desperate plea, hoping that Gov. Rick Scott will intervene.
These owners are not in foreclosure, nor are they behind on their mortgages. Instead they are being threatened by a group of developers, Madison Oaks Partners, who are using a Florida state law originally designed to protect homeowners from natural disaster, to terminate the condominium agreement and force them to sell their units.
The developers seek to convert the Tampa area complex into more lucrative rental apartments. They could take over the complex at a board meeting Sept. 5.
“The governor needs to step in and halt these forced terminations immediately. We don’t have much time,” said Stephanie Krasowski, one of the remaining owners at the Madison Oaks complex. Krasowski, who like others, bought her unit at the peak of the last housing boom, has led the fight against the developers, starting a group that now represents more than 1,000 Florida condominium owners.
A Florida law used to require that 100 percent of owners approve termination of a condominium agreement, but an amendment to that law in 2007 dropped that to 80 percent. It did stipulate, however, that if 10 percent of owners disapproved, the termination could not move forward. The ranks of owners in protest have dwindled, and while developers say they can move ahead, Krasowski claims it would be unfair if they do.
“We are hovering right at 10 percent of individual owners, thanks to the aggressive bullying of our group by the bulk buyer,” added Krasowski.
Madison Oaks Partners, which would only be required to pay “fair market value” for the remaining units, claims it is trying to settle with the condo owners. The trouble is that many of the owners bought at the peak of the market, when prices were far higher than they are today. Madison Oaks offered this written statement:
“Madison Oaks Partners has made a generous offer to the attorney representing a group of individual condominium owners at Madison Oaks, and we are awaiting a response. The partnership continues to exercise its contractual rights pursuant to the Madison Oaks Condominium Declaration. We would like to reiterate that we are not violating anyone’s rights in pursuing this termination; we are simply exercising our rights as provided for in the Condominium Declaration.”
State Rep. Carl Zimmermann, who failed earlier this year to pass legislation that would change the law, sent an open letter to Scott this week. He called it, “a matter of great urgency” that requires, “immediate action.”
“We can’t do anything as a legislative body until we go back in session, which is in March, and what I want him to do is simply issue an executive order to the Department of Business and Professional Regulation, telling them not to approve any more conversions until we have definitive word from either the courts or the legislature on whether and how this can be resolved,” said Zimmermann.
For now, the governor’s office tells CNBC it has passed the matter on to the state regulatory agency. A spokesperson from that agency sent the following: “The optional condo terminations process was passed and signed into law in 2007. Although the current law does not provide the Florida Department of Business and Professional Regulation with the authority to regulate condo terminations, we are paying close attention to the matter.”
Scott could revisit the issue, which is happening at other condominium complexes across the state, as the midterm election draws closer. Scott just won the Republican primary and is in a tight race with Democrat Charlie Crist, who was governor from 2007 to 2011 and who signed the 2007 law. More than 200 condo owners have reportedly already lost their homes due to that law.
If the remaining condo owners lose their fight, Madison Oaks can terminate the condo agreement and buy the remaining units at “fair market value.” That value is about $50,000 less than Krasowki’s mortgage, never mind the original $32,500 down payment she put on the unit when she bought it.
“The problem here is that we are struggling with funds to continue this fight that has already reached the one year point. If the governor doesn’t act now, myself and all my neighbors will lose our homes to an unconstitutional law, one that was purposely enacted to allow this very situation and for the enormous financial gain for a developer or bulk buyer. It has been overlooked, ignored and abused for the last seven years,” said Krasowski.