By Deborah Goonan, Independent American Communities
News of condo takeovers in Florida over the past several years is fairly well known. Then the news began to trickle out about similar actvity in Chicago.
Now the despicable practice is moving to other states, including Arizona.
Is your home at risk for takeover? State law allows for condos to be forcibly taken
In a condo takeover, real estate investors buy multiple vacant or distressed units and then force dissolution or termination of the condo association. That compels the rest of the owners to sell against their will, even if they will lose money on the sale. Worse yet, in some cases, the former condo owner can be left holding the outstanding mortgage!
Some legal experts have called the practice “eminent domain for condos.”
In response to some of my articles about Florida, some of my friends and colleagues told me that the same thing could never happen in their states. I assured them, yes, it can happen, and it probably will.
In fact, the same trend is happening in condo associations worldwide.
A condo association is a corporation, and therefore, in times of financial distress, it is vulnerable to hostile takeover.
A hostile takeover happens the same way in other corporations: one or more opportunistic investors simply buys enough shares to control the votes (or proxies), thus overthrowing the board of directors or trustees, and taking control of that corporation.
The result, for most organizations, is a complete “restructuring,” and quite often, loss of jobs.
If your corporate condo association gets reorganized, then you will lose your home instead of your job. What a shocking way to shatter the American Dream.
By comparison, the reason your town, city, or council does not experience such an abrupt overthrow is because the US is a Constitutional Republic, with a Democratic voting policy of One Person, One Vote.
Nor can the government take your home away without just compensation, and lengthy legal process.
To paraphrase a condo owner from Arizona, “Why would anyone ever buy a condo?”
HOA C.U.R.S.E. No. 4: FL condo laws loopholes
Chicago developer de-converting condos
Condo (Strata) termination trend goes worldwide