Condo Takeovers Are On the Rise: Signs a Developer Is Coming for Your Place Next

An ultraluxury condominium developed by a Dubai-based company will replace the Champlain Towers South that partly crumbled in June 2021 in Surfside, FL, killing 98 people.

Units at the new complex will start at $15 million each, according to Mansion Global.

More and more developers are coming to Florida and taking over condo complexes in the wake of Surfside’s collapse—and this could be a sign of what’s to come for the rest of the country.

Condos in Florida are in trouble

Champlain Towers South was constructed in 1981, and after it crumbled, investigators found that several design and construction features were not up to code 40 years later.

They discovered deteriorated concrete in the basement parking garage due to water damage, and deficiencies in the pool deck’s alignment and reinforcement as well.

A new law was passed that mandated condo buildings over 30 years old need to pass a structural integrity inspection. It also required homeowners and condo associations to finance the needed maintenance and repair work.

The law aimed to ensure that associations were setting aside sufficient funds to carry out essential repairs and maintenance on their properties over the long term.

Even though Gov. Ron DeSantis has said he wants “to make sure any safety measures are implemented in ways that are reasonable and affordable to the residents,” there are still fierce critics of the law.

The legislation has “the unintended consequence of making condominium living more expensive,” says Jeffrey Margolis, partner and real estate attorney at Berger Singerman law firm in Florida.

“Although the intention of the new laws was to bolster the financial stability, structural integrity, safety, and longevity of condominiums, all condo associations will be facing challenges created by the new laws, and condominium owners will be faced with increased financial burdens over the short term,” says Margolis.

When high-end real estate developers come knocking

What are some signs that your property is in trouble, or being eyed by developers?

First of all, you might start getting a lot of unsolicited calls and postcards from real estate agents asking if you are looking to sell your condo.

“If other properties in the neighborhood have been bought up or demolished recently, this could indicate a larger redevelopment effort in the neighborhood and that your condo may be a future target for development,” says Florida-based real estate agent Alexei Morgado, CEO and founder of Lexawise.

Other signs your condo could be attractive to developers, according to the Miami Herald, include having a surface parking lot—since that means they can maximize the building’s footprint—and if it has fewer than 100 units, so there are fewer owners to negotiate with.

Developers are especially interested in oceanfront properties on the sand, even in the wake of recent hurricanes.

“When it’s 17 degrees in Philly and you step in brown slush … you want to be in South Florida,” says Jeff Lichtenstein, CEO and broker at Echo Fine Properties in Palm Beach, FL. “We always have a major boost in sales if there’s an early snowstorm in the Midwest/Northeast. Those potential buyers for warmer climates also don’t visit us during the hurricane season, so it’s out of sight, out of mind by the time a snowstorm hits.”

Developers also look for buildings constructed before 1995, according to the Miami Herald, where “owners are absolutely being priced out because of the assessments, or they are concerned that the fees will put a significant strain on their budget and they don’t want to be burdened with ongoing expenses,” says Cara Ameer, a real estate agent licensed in both Florida and California.

What happens if your condo is taken over by a developer

When a condo building is being acquired by a developer, they usually present condo owners with an offer above the market value to encourage them to sell their unit.

In Florida, mysterious LLCs have been buying condos in The Solaris at Brickell Bay building in Miami for more than two years, according to the Miami Herald.

The LLCs currently own more than half of the tower’s 138 units, but they still fall short of the 80% threshold needed by state law to dissolve the condo association and take full control of the property.

Now, many of the remaining owners are holding out for bigger offers.

The outlet reports that an attorney who represents more than 20% of owners in the building is reportedly urging the developer to offer his clients $3,500 per square foot for their units.

The situation is still ongoing.

To take over a condo building in most cases, the developer will need at least 80% of unit owners to agree to sell. A deal can then move forward, unless 5% of owners vote against the deal.

Then again, many older buildings require approval of 100% of unit owners for termination, according to their charter.

At Biscayne 21 in Miami, which was built in 1964, that rule was enough to kill a takeover since they had some holdouts.

But if a building is getting taken over, the amount of notice people get varies.

“Sometimes it’s months, sometimes a year. If you own, you’ll get a buyout offer eventually,” says Ron Myers of Ron Buys Florida Homes in West Palm Beach, FL.

What should you do if a developer wants to buy your property?

For some condominium unit owners, “buyout offers from developers are a lifeline. If condominium owners cannot afford increased assessments, their only option may be to sell their unit,” says Margolis.

But don’t take the first offer you receive.

“Holding out for a better offer can be beneficial, especially if the initial proposal doesn’t meet your expectations or reflect the property’s true value,” says Morgado. “Working in unison with other unit owners can also firm up your bargaining power, given that most developers prefer to take over entire buildings for their redevelopment purposes.”

It’s highly advisable that you seek the services of a real estate attorney specializing in condominium law.

“I would recommend getting an attorney right away to represent you, negotiate on your behalf, and review all offers and documents so that you understand your rights,” says Ameer.

If you don’t want to move, can you negotiate staying in the building?

“Sometimes, but it’s rare,” says Myers. “A few developers offer buyback options or discounts on new units, but most just want a clean slate.”