Firm shareholder Roberto C. Blanch provides vital input and insight into the issue of bulk buyer investors taking control of the condominium boards for aging local enclaves in a Miami Herald article on the topic in today’s edition of the newspaper. The article reads:
. . .The situation at the two-story building at 2033 Calais Drive is, in some ways, a reflection of forces resulting in steep costs for many South Florida condo owners. Those costs include inflation, ballooning insurance prices and a condo safety law that was enacted after the deadly Champlain Towers South collapse in Surfside and will require associations to maintain reserves for structural repairs by 2025.
Properties such as Fiorda’s 1959 building have become red meat for investors in North Beach, a gentrifying neighborhood full of aging coastal structures and one of the last Miami Beach slivers that some middle-class and working-class families can afford.
But the substantial, sudden cost increases at 2033 Calais Drive also reflect the tactic of investors taking over condo boards and making spending decisions with limited input from other owners who must also foot the bills. Condo associations in Florida have broad latitude to make financial decisions under a “business judgment rule” that protects directors from liability as long as they can show a reasonable basis for their spending, said Roberto Blanch, a South Florida condo lawyer.
“There is this gray area, I think — let’s call it this wiggle room — that might be enough to let them get away with some unsubstantiated or some uncorroborated increases,” Blanch said. “The board can always get away with saying, ‘We’re just spitballing here.’”
At Fiorda’s building, a new board controlled by Stonemason and its leader, Gustaf Arnoldsson, passed a 2023 operating budget of more than $271,000, up from about $66,000 in 2022, according to a document that Fiorda provided to the Miami Herald.
The proposed spending includes increases in legal fees from around $800 to $20,000, management fees from $4,800 to $9,600 and, most significantly, reserve-fund contributions from $5,800 to $150,000.
The resulting owners’ monthly fees of $2,000 or more are unusually high. Across Florida, average homeowners association fees are less than $400 a month, according to data from the Foundation for Community Association Research. . .
. . .Blanch, the condo lawyer, said he has heard allegations of investors buying up units in condo buildings then raising costs for the remaining owners “with the objective of either getting them out or having them agree to sell their units to the bulk owner.”
But those motives are hard to prove, he said.
“Did it go up drastically because it was woefully under-budgeted before, or did it go up drastically because there are some ulterior motives?” Blanch said. “That’s probably the million-dollar question.”
Condo owners in North Beach are trying to fight back, working with attorneys and filing detailed information requests to their associations. The Calais Drive owners recently filed complaints with the state’s Department of Business and Professional Regulation. And owners at both buildings have flagged their concerns to Miami Beach Commissioner Kristen Rosen Gonzalez, who said she was troubled.
“We don’t want predatory developers in our city,” she said. “At least buy these people out at their fair market value.”
Condo owners need to be vigilant, Rosen Gonzalez added, especially in smaller buildings that might be more susceptible to investor takeovers.
“I’m going to do whatever I can to inform people this is happening on Miami Beach,” she said. . .
Our firm salutes Roberto for sharing his insights into this timely and important topic for aging South Florida condominium enclaves with the readers of the Miami Herald. Click here to read the complete article in the newspaper’s website.