5 ms·

Their Retirement Plan Did Not Include Being Forced to Sell Their Condo

34 points by mikhael 4y ago

CraigRo 4y ago
This has happened in NYC as well, but is rare in such large buildings. Every offering plan contemplates deconversion; the issue is the pricing
toomuchtodo 4y ago
https://archive.is/HH9iI https://archive.is/HH9iI
barbazoo 4y ago
> Despite the inkling that the investor might want him out, Mr. Fellman, 57, was confident that things would be fine, since he legally owned the property, and the condo declaration required that 100 percent of owners would need to be on board for the condominium to be terminated. > But the Scully Company didn’t stop there. Since it owned all the other units, it was able to take over majority control of the condo board, and it voted to lower the threshold of owners required to terminate down to 80 percent. Then, in February 2021, the Scully Company voted to terminate the condominium, which meant the Fellmans would be legally obligated to sell their unit to the company. That must be so stressful to deal with. Is that legal to lower the threshold like that?
- Kon-Peki 4y ago
  If the state condo laws say it is, then yes. This is in Florida, not exactly known for such a great body of condo law. But even in places like New York, Illinois, Pennsylvania, etc - with a long, long history of condominiums, this is going to be allowed. All the condo units but one were owned by the company. That’s a huge red flag, to the point that you’d never be able to get a federally-insured loan to buy in this building. Generally anything less than 50% owner-occupied can’t be financed - you’d have to pay cash, your real estate attorney will tell you to run away, etc.
  - marc_abonce 4y ago
    > All the condo units but one were owned by the company. That’s a huge red flag, to the point that you’d never be able to get a federally-insured loan to buy in this building. Generally anything less than 50% owner-occupied can’t be financed - you’d have to pay cash, your real estate attorney will tell you to run away, etc. Of course, but in OP's story the owners bought the condo years before the real estate company had come in to buy all the other units. So I agree that this would be a red flag but unfortunately this red flag still exists even if the condos are fully owner-occupied at the time you buy them.
- deleted 4y ago
  [deleted]
GauntletWizard 4y ago
I'm sympathetic to their plight, and wish them to get a good payout, but this is the basic contract of a Condo - You don't own the building, you own a slice of it, and if everyone else wants out you're gonna have to agree. They never owned their home. They owned a share in a compact that owned their home. Where to draw the line between the rights of the majority to implement rules and the rights of the minority to refuse them is one of the central problems of civics, and there's no one right answer.
- pram 4y ago
  Sometimes it's even worse than that. I had a condo and then I discovered all the units were on land that was just a 99 year leasehold. The whole thing had an expiry date no matter what lol
  - grugagag 4y ago
    I think it should be illegal to not disclose that info when you buy. But I guess it worked out for you when you passed the buck and sold it to somebody else…
- zajio1am 4y ago
  Here, owning the condo flat means being first-class property owner, registered in public real estate cadastre, like any other real estate, while a homeowner association manages common/external parts of the building, it does not own them, and has limited authority to tasks strictly defined by law. It seems strange to me that condo ownership in US is so much weaker. > They never owned their home. They owned a share in a compact that owned their home That is pretty much housing cooperatives works here, while condos provides much higher legal certainty by registering members as individual flat owners.
  - listenallyall 4y ago
    Just FYI, nobody else knows where your "here" is.
  - refurb 4y ago
swalling 4y ago
Condos are yet another example of how being poor in America is expensive. While condos are attractive for people who can't afford regular homes, mortgages are harder to get for them. Even if you have a perfect credit score and 20% down, there is a whole category of condo called "nonwarrantable", which makes them ineligible with any lender who sells direct to Fannie Mae and Freddie Mac. One of the laundry list of stipulations is that no single person or entity owns more than 10% of all condo units in the building or development. Condo buyers are living with risks like the article describes, and they're paying more for it to the bank for the privilege. It's a cruel joke that the people who can't afford single family home mortgages are given fewer protections and subject to a litany of HOA payments, special assessments, fees, and fines that can result in the condo being foreclosed on even if you own it free and clear. There is a great novel "Condominium" by John D. MacDonald that lays bare the skeezy nature of condo developments. It's from 1977, and here we are 40-50 years later, still letting people get conned and maybe even die (https://en.wikipedia.org/wiki/Surfside_condominium_collapse https://en.wikipedia.org/wiki/Surfside_condominium_collapse) thanks to the numerous messed up incentives in condo development.
- Algemarin 4y ago
  > While condos are attractive for people who can't afford regular homes The people profiled in the article are not clinging to their condo because they can't afford a "regular home". They already bought a house, they just had two properties: > In 2004, right before they had children, they moved out and into a house four miles away, so their twins could grow up with a backyard. But they always planned to return to the condo so they held onto it, renting to a trusted tenant and looking forward to retirement there. Where's the article about how people who own two residences are depriving people with no residences?
  - swalling 4y ago
    Don't assume that these particular owners are the norm. They are highlighted in the article because of the unusual situation with the takeover by a developer. The more typical condo buyer looks more like a senior on a fixed income looking to downsize or a first time buyer in a expensive city who can't possibly afford a single family home.
powera 4y ago
More "entitlement culture" being glamourized by the New York Times.
endisneigh 4y ago
This is exactly why I tell people not to buy a condo (in the USA). In the north east you see "triplex", or a three-unit multifamily home. Usually separate individuals own each the units and all is well. However, as life happens one unit will eventually go for sale. I've heard of a case where one of the other owners bought a unit so they owned 2 out of the 3, and then placed a very expensive special assessment to gut renovate the entire thing as it was in bad shape, but livable. The other owner couldn't afford this and so they too were bought out at a fraction of the price.
Ancalagon 4y ago
"Everyone is entitled to their own opinions", yada yada. Funny how many HNers in here are against condos, in contrast to how many are normally YIMBYs in other threads. Personally I wouldn't want to own a condo, but I can understand the appeal.
- marc_abonce 4y ago
  I don't understand, is there some irony I'm missing out or something? The appeal of condos is that they're usually cheaper than an independent house at the same area. The comments here seem to be against condos because they lend themselves to situations like OP's where the owners are getting screwed out of their own homes. I don't see the relationship with N/YIMBY here. Nobody here is discussing the existence of the buildings themselves, but rather the contracts and the laws around the owner's rights.
  - Ancalagon 4y ago
    I just mean it’s ironic bc it would indicate HNers want condos to be built when they themselves would never live in them. So it’s like, for the people that can’t afford SFHs or can’t work remote I guess.
  - cozzyd 4y ago
    (condo dweller here) Well, I'm pretty sure it'd be impossible to have an independent house in my neighborhood (Chicago loop).
- Gibbon1 4y ago
  Unpopular when I float the idea but a suggestion is to just tax rental properties to fund rent support for retired renters. Something like that would make renting your whole working life more attractive.
woah 4y ago
Seems like the only problem here is a dispute about the accuracy of the appraisal. With an accurate appraisal the owners could have bought a comparable property elsewhere. Come to think of it, given that the value of the appraisal is the main issue, it’s very strange that the owners never got their own appraisal, instead paying all these legal fees while relying on an automatically generated “Zestimate”. The fact that they were involved in a legal battle for years without ever having gotten an appraisal leads me to think that getting a fair price was never their goal, but instead they were hoping for an inflated price as holdouts. Then the NY Times writer came in, and noticing this glaring hole in their story, needed to fill it with a quick search on Zillow.

34 points by mikhael 4y ago

This has happened in NYC as well, but is rare in such large buildings. Every offering plan contemplates deconversion; the issue is the pricing

toomuchtodo 4y ago

https://archive.is/HH9iI https://archive.is/HH9iI

barbazoo 4y ago

> Despite the inkling that the investor might want him out, Mr. Fellman, 57, was confident that things would be fine, since he legally owned the property, and the condo declaration required that 100 percent of owners would need to be on board for the condominium to be terminated. > But the Scully Company didn’t stop there. Since it owned all the other units, it was able to take over majority control of the condo board, and it voted to lower the threshold of owners required to terminate down to 80 percent. Then, in February 2021, the Scully Company voted to terminate the condominium, which meant the Fellmans would be legally obligated to sell their unit to the company. That must be so stressful to deal with. Is that legal to lower the threshold like that?

Kon-Peki 4y ago
If the state condo laws say it is, then yes. This is in Florida, not exactly known for such a great body of condo law. But even in places like New York, Illinois, Pennsylvania, etc - with a long, long history of condominiums, this is going to be allowed. All the condo units but one were owned by the company. That’s a huge red flag, to the point that you’d never be able to get a federally-insured loan to buy in this building. Generally anything less than 50% owner-occupied can’t be financed - you’d have to pay cash, your real estate attorney will tell you to run away, etc.
- marc_abonce 4y ago
  > All the condo units but one were owned by the company. That’s a huge red flag, to the point that you’d never be able to get a federally-insured loan to buy in this building. Generally anything less than 50% owner-occupied can’t be financed - you’d have to pay cash, your real estate attorney will tell you to run away, etc. Of course, but in OP's story the owners bought the condo years before the real estate company had come in to buy all the other units. So I agree that this would be a red flag but unfortunately this red flag still exists even if the condos are fully owner-occupied at the time you buy them.
deleted 4y ago
[deleted]

GauntletWizard 4y ago

I'm sympathetic to their plight, and wish them to get a good payout, but this is the basic contract of a Condo - You don't own the building, you own a slice of it, and if everyone else wants out you're gonna have to agree. They never owned their home. They owned a share in a compact that owned their home. Where to draw the line between the rights of the majority to implement rules and the rights of the minority to refuse them is one of the central problems of civics, and there's no one right answer.

pram 4y ago
Sometimes it's even worse than that. I had a condo and then I discovered all the units were on land that was just a 99 year leasehold. The whole thing had an expiry date no matter what lol
- grugagag 4y ago
  I think it should be illegal to not disclose that info when you buy. But I guess it worked out for you when you passed the buck and sold it to somebody else…
zajio1am 4y ago
Here, owning the condo flat means being first-class property owner, registered in public real estate cadastre, like any other real estate, while a homeowner association manages common/external parts of the building, it does not own them, and has limited authority to tasks strictly defined by law. It seems strange to me that condo ownership in US is so much weaker. > They never owned their home. They owned a share in a compact that owned their home That is pretty much housing cooperatives works here, while condos provides much higher legal certainty by registering members as individual flat owners.
- listenallyall 4y ago
  Just FYI, nobody else knows where your "here" is.
- refurb 4y ago

swalling 4y ago

Condos are yet another example of how being poor in America is expensive. While condos are attractive for people who can't afford regular homes, mortgages are harder to get for them. Even if you have a perfect credit score and 20% down, there is a whole category of condo called "nonwarrantable", which makes them ineligible with any lender who sells direct to Fannie Mae and Freddie Mac. One of the laundry list of stipulations is that no single person or entity owns more than 10% of all condo units in the building or development. Condo buyers are living with risks like the article describes, and they're paying more for it to the bank for the privilege. It's a cruel joke that the people who can't afford single family home mortgages are given fewer protections and subject to a litany of HOA payments, special assessments, fees, and fines that can result in the condo being foreclosed on even if you own it free and clear. There is a great novel "Condominium" by John D. MacDonald that lays bare the skeezy nature of condo developments. It's from 1977, and here we are 40-50 years later, still letting people get conned and maybe even die (https://en.wikipedia.org/wiki/Surfside_condominium_collapse https://en.wikipedia.org/wiki/Surfside_condominium_collapse) thanks to the numerous messed up incentives in condo development.

Algemarin 4y ago
> While condos are attractive for people who can't afford regular homes The people profiled in the article are not clinging to their condo because they can't afford a "regular home". They already bought a house, they just had two properties: > In 2004, right before they had children, they moved out and into a house four miles away, so their twins could grow up with a backyard. But they always planned to return to the condo so they held onto it, renting to a trusted tenant and looking forward to retirement there. Where's the article about how people who own two residences are depriving people with no residences?
- swalling 4y ago
  Don't assume that these particular owners are the norm. They are highlighted in the article because of the unusual situation with the takeover by a developer. The more typical condo buyer looks more like a senior on a fixed income looking to downsize or a first time buyer in a expensive city who can't possibly afford a single family home.

powera 4y ago

More "entitlement culture" being glamourized by the New York Times.

endisneigh 4y ago

This is exactly why I tell people not to buy a condo (in the USA). In the north east you see "triplex", or a three-unit multifamily home. Usually separate individuals own each the units and all is well. However, as life happens one unit will eventually go for sale. I've heard of a case where one of the other owners bought a unit so they owned 2 out of the 3, and then placed a very expensive special assessment to gut renovate the entire thing as it was in bad shape, but livable. The other owner couldn't afford this and so they too were bought out at a fraction of the price.

Ancalagon 4y ago

"Everyone is entitled to their own opinions", yada yada. Funny how many HNers in here are against condos, in contrast to how many are normally YIMBYs in other threads. Personally I wouldn't want to own a condo, but I can understand the appeal.

marc_abonce 4y ago
I don't understand, is there some irony I'm missing out or something? The appeal of condos is that they're usually cheaper than an independent house at the same area. The comments here seem to be against condos because they lend themselves to situations like OP's where the owners are getting screwed out of their own homes. I don't see the relationship with N/YIMBY here. Nobody here is discussing the existence of the buildings themselves, but rather the contracts and the laws around the owner's rights.
- Ancalagon 4y ago
  I just mean it’s ironic bc it would indicate HNers want condos to be built when they themselves would never live in them. So it’s like, for the people that can’t afford SFHs or can’t work remote I guess.
- cozzyd 4y ago
  (condo dweller here) Well, I'm pretty sure it'd be impossible to have an independent house in my neighborhood (Chicago loop).
Gibbon1 4y ago
Unpopular when I float the idea but a suggestion is to just tax rental properties to fund rent support for retired renters. Something like that would make renting your whole working life more attractive.

woah 4y ago

Seems like the only problem here is a dispute about the accuracy of the appraisal. With an accurate appraisal the owners could have bought a comparable property elsewhere. Come to think of it, given that the value of the appraisal is the main issue, it’s very strange that the owners never got their own appraisal, instead paying all these legal fees while relying on an automatically generated “Zestimate”. The fact that they were involved in a legal battle for years without ever having gotten an appraisal leads me to think that getting a fair price was never their goal, but instead they were hoping for an inflated price as holdouts. Then the NY Times writer came in, and noticing this glaring hole in their story, needed to fill it with a quick search on Zillow.