As if there wasn’t enough to worry about, there now comes news of what appears to be a scheme created by investors to take over condo buildings. While only a few cases have surfaced, it is possible that more may soon come to light.
How it Works
A real estate development company will purchase foreclosed units within a condo building. Once they own the majority of the units they can then proceed to take control of the condo’s association. From there they typically drive up rents for rented units or charge a substantial “condo” fee for those who own their unit. With housing costs pushed up substantially residents are forced to vacate. Owners who wish to remain in their homes and can’t afford the fees might find themselves facing a foreclosure suit and inevitably getting evicted. Once they push all the residents out, they are free to do what they wish in terms of pricing since they own the entire building.
Signs it May be Happening to You
If you have received any notices from a company you’ve never heard of demanding condo fees, it is wise to seek legal advice. While the communication received may sound like a scam, it may very well be real. Real estate development companies or investors in control of an association can charge the fees they feel are necessary to maintain and repair a condo building, because they own the majority of the building’s units, they have the majority vote.
It is most likely to occur in moderately priced housing with several units that have been foreclosed and are now owned by the bank. If you are in a situation similar to this and are aware that the majority of the units have been purchased by the same company, it is a good time to schedule a free consultation with an attorney. If left unattended it could result in a foreclosure suit. All those fees can quickly add up and a Homeowner’s Association has certain rights that can result in their ability to foreclosure your home.
How They Can Get Away With It
It is in the real estate developers right to “improve” properties it has invested in, particularly if they have been severely neglected. Investors purchase distressed properties that are in need of major renovations. The cost of performing the renovations are then passed on to building tenants. All building renovations and services are assessed to the tenants and charged on a monthly basis as “condo fees”.
In the case of these “schemes”, it appears that none of the services charged for have actually been performed and the fees are just a way to push tenants out of their units. If the investor is coming in with the intent to improve the condo building they are entitled to charge condo fees. In many cases good-willed investors do work with tenants to make improvements to the property.
If you or someone you know is facing a similar situation, it is imperative that you immediately seek legal representation, it can make the difference between remaining in your home or being forced out. It doesn’t seem possible that even when you are paying your mortgage there is a chance that your home could be foreclosed, but it is. Don’t ignore fees that have been newly assessed by the association. A foreclosure defense attorney is in the best position to help homeowners understand their rights and create a plan of action.