FLORIDA – In Florida, Condo Battles Play Out

The Wall Street Journal: In Florida, Condo Battles Play Out
Fallout From Real-Estate Bust Now Pits Developers vs. Unit Owners
By Kris Hudson and Arian Campo-Flores
August 5, 2014

The drama of Florida’s boom-then-bust real-estate market is now playing out in the courts as condominium owners and developers square off over forced sales under a law initially intended to allow for hurricane-damaged condo complexes to be rebuilt quickly.

The battle has percolated since the market collapsed in 2007-08—which left both developers and condo owners facing steep losses—and now various developers want to reverse past efforts to convert rental-apartment complexes into for-sale condos.

The problem is that, after a decline in condo values during the downturn halted sales, these developers are finding themselves with buildings that are composed mostly of apartments they still own and partly of condos owned by individuals. That mix is unworkable for several reasons. Foremost, it impairs developers’ ability to make changes to the complexes’ common areas, like pools or roofs, because such changes require approval and capital from all condo owners in the complex.

All told, 163 complexes in South Florida languish today as part condo and part rental after their conversions failed in the downturn, according to Jack McCabe, CEO of McCabe Research & Consulting LLC, a research firm in Deerfield Beach, Fla. On a statewide level, the number is “probably close to 400,” he said.  Read more:

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