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MetroWest condo owners might be

forced to seII so units can become
apartments
October 30, 2011 | By Mary Shanklin, Orlando Sentinel
Condo owners in the Element at MetroWest say they now face one of their worst fears: Their west
Orlando condominium is reverting to apartments, and they may be forced to sell their units to the
property's new owner for far less than what they paid for them several years ago.
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Orlando real-estate agent Yadira Bello paid $178,900 for her one-bedroom condo in the gated,
manicured community at the peak of the market in 2007 shortly after developers converted it from
an apartment complex into a condominium with the goal of reselling units to buyers like her. But the
home market slumped, few units sold and, this past April, a group of California-based investors paid
about $11 million for the common areas and more than 200 units in the 328-unit complex.
Two months after it bought the bulk of the Element, Karlin Real Estate moved to dissolve the
condominium association. t has also purchased dozens of remaining units, each for a fraction of the
price that Bello and others paid for theirs.
" have a mortgage on it," Bello said. "t's going to be impossible for them to offer me the money owe
on it."
Condo-to-apartment conversions are a rare but emerging phenomenon in the Orlando area, which in
2005 led the country in the number of apartment-to-condominium conversions. n the six years since
then, the median condo price in the four-county metropolitan area has plummeted from $171,100 to
$50,400, according to Florida Realtors.
The plunge in prices and stalled sales spurred state lawmakers to make it easier for majority owners of
condo communities to convert them into apartment complexes, which are increasingly popular and
recording their highest occupancy rates in years.
"What the Legislature has done over last four or five years, they built into the statutes to make it easier
to terminate the condominium than it was previously, in part because many were damaged in the
hurricanes, and then [because of] the issues with the decline of the real-estate market," said Maitland
lawyer Scott Newsom, who worked on a condo-termination case in Seminole County several years ago.
The big question swirling among residents of the Element and condominiums elsewhere is whether
owners such as Bello can be forced to sell their units and move.
Home Collections Condo Association
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Under Florida law, the majority ownership of a condominium such as Karlin Real Estate in the
Element's case can dissolve the condo association and do one of two things: give owners of the
remaining units a percentage share of the newly converted apartment complex in exchange for their
condos or buy the remaining units from those owners for fair-market value.
So the Element's new owners could, for instance, give Bello a small interest in the apartment project in
exchange for her unit or could, based on an appraisal, pay her $70,000 for the unit.
Either way, she would no longer own her condo and would have to move.
"Yes, they would be forced out," said Newsom, of the law firm Katzman, Garfinkel & Berger, which
represents homeowner associations.
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At the Element, Bello said that, even if the new complex owners could pay her enough to cover her
outstanding mortgage, she doesn't want to leave.
" bought this to live here, and don't want to move. t's a unique unit," Bello said. "When you buy
something, you buy it because you like the space; you like the area; you like the view. don't want to
change it. don't want to live in another property."
Unit owners can derail a condo-to-apartment takeover if owners of 10 percent of the units object. So far,
29 owners of Element units have filed a protest about five short of the 10 percent required by state
law. The matter is expected to be decided by the courts.
Minnesota resident Jon Brandt is organizing Element owners to oppose what he calls a "corporate
takeover" of the remaining units.
"They could eventually force us out and, in the meantime, they could restrict access to common areas
and continue to impose fees for association dues," Brandt said. "There's no end to the leverage they
have. A corporate takeover is so abusive to minority rights."
The company in charge of property management at the Element, Michigan-based McKinley nc., is
working with unit owners and their lenders to pay fair-market value for the units and resolve outstanding
mortgages. The company is also helping relocate former unit owners to similar properties nearby, said
Albert M. Berriz, McKinley's chief executive officer. He said his company was able to help complete a
similar condo-to-apartment conversion at Waldengreen Apartments in south Orlando.
"The fair-market value is less than they paid at the time, but they will get to buy at lower values, too,"
Berriz said. "We spend a lot of time hand-holding each case. You have to deal with their bank, too. We'll
sit there till we make people comfortable and put them in an equal spot."
Most of the remaining owners at the Element, he added, are investors; very few owner-occupants would
have to leave their homes. Berriz said his company is also working with condo renters at the Element to
ensure they can remain in units being sold and converted back to apartments.
CB Richard Ellis multifamily specialist Shelton Granade, who worked on the sale of the Element earlier
this year, said he expects to see the dissolution of more condominiums as buyers of fractured condo
deals try to sort out what to do with the properties.
Condo terminations can be a somewhat risky process, he said, but ultimately they put the property back
into the hands of a single company responsible for maintaining it.
"Generally speaking, condo associations are so upside down, or in such disarray, that it ends up being
financially better if someone can bring stability to the deal and bring them back into good condition," he
said.
mshanklin@tribune.com or 407-420-5538
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