Another Economic FIASCO. The headline in a local paper ".....Owners left powerless in Bulk Buyer Takeover". Condo Owners lost control of their HOME OWNERS ASSOCIATION to a large firm THAT BOUGHT OUT UNITS ON CHEAP. According to the article, over 11,000 condos across this nation have suffered similar scenarios.
The problem here is not only the takeover but the reasoning behind the Condo concept. From the beginning folks "in the know" made clear statements that CONDOMINIUMS were much safer than COOPERATIVES BECAUSE OF THE HOME OWNERS ASSOCIATION and legal bylaws!!! Home owners supposedly could not lose control of the buildings and grounds and NOTHING COULD HAPPEN TO THE INVESTMENT.
That word-NOTHING- CREATES UNEASINESS. SEARCH FOR NOTHING! Can you find it?????????? NOTHING ALWAYS HAS SOMETHING WITHIN IT THAT RENDERS the word NOTHING USELESS.
NOTHING CAN GO WRONG!!!!!!!Puleeeeeeeeeeze!!!!!!!!!! GIVE ME A BREAK. The Government says that all the time and look at the messes they're trying to clean up!!!!!!!!!
In this case NOTHING HAD A LOT OF SOMETHING: property values reduced from a quarter of a million dollars to 40-50,000 dollars with numerous vacancies at that price; the collection of dues for HOA dropped, so disrepair began when existing homeowners couldn't meet upkeep; a majority of these 1/4million dollar units became available at the CHEAP; a large company saw the profit in buying up whole groups of UNITS which led to control of the condo association through the HOA.
One likes to think that FAIRNESS always rules--but it's not written in the HOA bylaws!!!!!!!!What is written is that a majority of homeowners control the welfare of the residents and buildings. That means MR. NEW PROFIT MAKER (who is now THE MAJORITY) is in control of this very democratic Association and has the existing tenants over the proverbial barrel. It's legal. It's not real nice. But baby, it's business (condos WERE always more of a business then just owning a home--that's why an HOA was needed) and PROFIT is necessary (either for keeping up the Condos or for a new majority investor) and is the MOTIVE.
Is that wrong? NO!!!!!!
This particular group seems to have been more fair than some would have been. They really refurbished the run down place, added attractions, only doubled rather low dues and assessed current homeowners what amounted to a minimal amount under five grand for the improvements.
HOWEVER, in the interest of protecting their derrieres, they blocked new owners wanting to buy condos by claiming " the new buyers would not have the means to meet condo obligations" In other words-UNIT OWNERS must SELL TO BIG COMPANY (B.C.) at a LOW PRICE OR NOT SELL at all AND PAY whatever B.C. DECIDES TO CHARGE for fees and assessments. B.C. meanwhile restores the units to use as RENTALS so the REMAINING HOMEOWNERS NOW LIVE in a RENTAL FACILITY.
IT'S ALL LEGAL, FOLKS!!!!!!!!!!Some readers will feel B.C. has done the town a FAVOR by cleaning up what was fast becoming a rat-infested defunct project. Others find profit making like this to be gross and morally UNJUST but have no advice to offer. All emotions aside--Condos are a BUSINESS and not TRUE HOME OWNERSHIP (one home+one owner) a system that has its OWN SET OF PROBLEMS).
This in no way attacks the condo owners and HOAs that are currently functioning well and keeping their legal promises to homeowners. There are many with fine standards and HOA officers. But remember this situation affects all condo owners by underlining the hazards that owning cooperatively entails. The condo owners who are now lucky enough to be holding strong assets, should still review their legal papers and by-laws to try to find those loopholes from which profit takers can gain advantage.
Okay, what's at stake here??????????(BESIDE THOSE REMAINING HOMEOWNERS LEFT HOLDING THE BAG????) The big answer is always the same.
LET THE BUYER BEWARE!!!!!!!! SORRY, THAT'S NOT WHAT YOU WANT TO HEAR!!!!!!!!But there are no free lunches or dumping of responsibility!
"NOTHING CAN GO WRONG" SHOULD SCARE THE HELL OUT OF YOU!!!!!!!!!!!!
Whenever you enter into an agreement that makes you only part of the whole, the only thing you really control is your PART. UNLESS, and this is a BIG UNLESS you either own a large portion like over 51% or you are HOA politician enough to convince others to buy into your investment (buy the defunct units) and stand on your side. CONDOS are an interesting use of CAPITALISM (profit taking) AND COMMUNISM (all for one and one for all). However, all business transactions have dozens of legal loop holes and it simply takes the right set of circumstances to make them pop out.
Have you read about TAKEOVERS in large companies????????? Well, now you understand how that happens. FIND THE LOOPHOLE, MAKE AN OFFER "THEY CAN'T REFUSE" AND IT'S PAYDAY!!!!!!!!!!!
Although leery of condos from the beginning because of an innate cautiousness about business, the reports showed that they thrived and only a few went under. Most, not all, HOAs seemed reasonable in their demands and restrictions. It is true of most things that when times are prosperous, attitudes soften and dire predictions calm. Still over the years intuition has proved better than most propaganda.
There is little that can be done for the owners in those 11,000 condos (that number is sure to increase as hard financial times continue to deflate home prices). The only advice to those currently in condo associations not currently under siege is to change some of the supposedly 'GOOD' RESTRICTIONS (like deciding who can live there and who cannot) to rules not so easily adaptable to ONE OWNER TAKEOVER. Go over your homeowner's laws with your lawyer with a fine tooth comb and change what can be reinterpreted for someone's advantage. WILL THAT DO IT???????? NO!!!!!! Not Entirely. But it may help in some ways to make the profit process less painful and maybe provide legal ways to cut current owners a slice of the profit.
AS LONG AS THERE IS A CHANCE TO MAKE A PROFIT UNDER ANY SYSTEM OF GOVERNMENT, LAW, OR BUSINESS PHILOSOPHY-- PROFIT takes precedence AND THOSE INVOLVED CAN BE RESPONSIBLE ONLY BY BEING AWARE! Make sure it's not your profit that's being taken.
CHEERS, CONNIE
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