Two bills in the Florida House of Representatives and Senate could close a legal loophole that had some condo owners selling their units for under their original purchase price.
The bills targets bulk buyers of condo complexes who seek to convert the buildings into apartments. Under current law, a building’s condo status can be removed in certain situations, allowing investors to force any remaining tenants to sell their units.
Although state law says these buyouts should pay fair market value, some owners end up getting paid less than the value of their mortgages, the Wall Street Journal reported.
The bill would have buyers pay 110 percent of market value or original purchase price — whichever is greater.
It would also prevent removal of a building’s condo status until the first mortgages on each unit is completed.
Florida’s condo statutes were amended in 2007 to allow for the bulk purchase of units to help developers take over run-down or storm damaged buildings. If 80 percent of a building’s tenants voted yes and less than 10 percent voted no, the developers could pay the holdouts fair market value and remove them, the publication reported.
The housing downturn stalled many developers’ plans to convert complexes to rental apartments, and some units traded ownership in the mean time. Now, developers are resuming their plans, causing the current owners to face buyouts that in some cases are much lower than their mortgages. [Wall Street Journal] — Sean Stewart-Muniz