News About Properties

Dolphin Tower’s troubles stack up [South Florida]

Amid the discovery of still more concrete problems at Dolphin Tower, it appears that more money and more time will be needed to repair the damaged 15-story condo building.

Just as vexing to displaced residents, though, are signals that Great American Insurance Co., of Ohio, intends to deny a claim made by Dolphin Tower’s homeowners’ association that would pay for repairs.

Great American, which holds a policy on the 117-unit tower in downtown Sarasota, indicated in a letter to the association earlier this month that a policy claim would not be valid unless the building were to actually fall down.

“One of the defenses, ironically, is that coverage exists only where a building or component actually collapses, rather than being merely at risk of collapse,” said Alan Tannenbaum, a Sarasota attorney representing the association, referring to the letter.

Commercial Real Estate Borrowers Joint the Ranks of Strategic Defaulters

I can understand why the REITs like this–free cash flow! But I can’t understand how it’s a good strategy for the borrowers. Commercial mortgages are a highly leveraged business, and if one of these guys came to me asking for more loans, after he stuck his last banker with his ailing shopping mall, I’d tell them to go . . . well, do something I probably shouldn’t say on a family blog.

Of course, not all of these are what I would call strategic defaults. Just as I think a homeowner should walk away from any mortgage that risks pushing them into insolvency, some of these “strategic defaults” may simply represent owners walking away now and salvaging their capital, instead of being foreclosed upon later after their tenantless rental or shopping mall has eaten up every last bit of cash and they have to shutter the doors. In neither the business nor the individual case does this strike me as reprehensible.

Bulk buyer’s condo coup busts small-time investors

In early 2008, with the real estate market well into meltdown, a deal to sell more than 100 condominium units in Royal Palm Beach was struck.

Considered one of South Florida’s first bulk condo buys, it was called “savvy” by market analysts and heralded as a sweetheart deal for Miami-based purchaser Kensington Trust LLC.

The high-priced flips that the trust subsequently made to individuals, sometimes for 75 percent more than it paid, was optimistically thought to be a sign of a real estate upturn.

Two years later, 70 percent of the units at the Kensington at Royal Palm Beach are in foreclosure or were recently repossessed by lenders.

Unit owners’ deaths raise many questions

Q:A senior-citizen couple purchased a unit in our 24-unit condominium in 2004 using a $213,000 mortgage and a very small down payment. In 2005, the husband died. In the period 2006 to 2008, the widow secured a total of $50,000 in home-equity loans (mortgages) on the unit. She died in May of this year. Sarasota County public records show about $170,000 in unpaid mortgages on a property worth about $130,000.

Her heirs came to the unit and cleaned it out to the bare walls. They appear to have walked away from this “underwater” mortgage situation. The July quarterly fee of $860 has not been paid. The bank may or may not even know of the owner’s death.

Do the heirs have any responsibility in this situation? Can they disclaim their inheritance? Should our condo board notify the bank? Should the board file a lien for unpaid fees? How many quarters of unpaid fees will the bank be responsible to pay in a foreclosure action? — A.O., Sarasota

After the craze: Condo conversions leave fractured communities

Michael Jacob was living at the Monterra apartments in Bonita Springs in 2006 when the wave of condo conversions came through.

Jacob, and everyone else in the 244-unit complex, was told by management to leave if they didn’t want to pay the sky-high price to buy - it was the very top of the wave to turn rental apartments into more lucrative condo sales.

Luckily for Jacobs, he and his wife didn’t buy their one-bedroom apartment for owner Tarragon Corp.’s asking price of about $200,000. Prices crashed almost immediately and Tarragon hastily canceled its plans even before the last tenants left.

“Poetic justice,” said Jacobs, who works as an assistant Lee County attorney. “It was just such an outrageous price.”

New state law might help reclaim fees [South Florida]

Many community associations throughout Broward have been struggling during the recession after foreclosed homes were left vacant and some financially strapped property owners quit paying their maintenance fees.

Now the state has stepped in to try to help; a new law allows both homeowner’s and condominium associations to deny nonpayers access to clubhouses, pools, fitness rooms and other shared community property. It also stipulates that foreclosing banks now will have to pay a year’s worth of unpaid maintenance bills or 1 percent of the original mortgage debt.

Even more controversial, the state allows associations to demand renters pay the community fees that their landlords aren’t paying, an attorney told a packed Pembroke Pines town hall meeting on Aug. 11.

Homeowner’s and condo associations now can directly bill renters for maintenance fees, with the property owner getting any rent money left over, said Lisa Magill, a partner in the law firm Becker & Poliakoff, which represents many community associations throughout South Florida.