Fort Lauderdale Foreclosures to be Acquired Thru Bulk Buys- By: John Cutts
Fort Lauderdale foreclosures in the condo sector will be contained through bulk purchases if a new legislative bill that would revise the liability of bulk buyers and would facilitate bulk buying in Florida is approved.
To rejuvenate the distressed condo sector in Fort Lauderdale and in other parts of Florida and manage the record numbers of vacant unsold condo units across the state, state legislators led by Representative Julio Robaina and Senator Eleanor Sobel introduced HB 327, which was designed to spur investors to buy condo units in bulk and accelerate the recovery of the condo market and the other subsectors of the residential real estate market in Florida.
The legislation would eliminate the maintenance liabilities of owners of single units in homeowner associations when other members of HOAs become delinquent in paying their fees. Current state laws require buyers or owners of at least seven units in a condo complex with at least 70 units to take over the maintenance of the building, including the repair of defects in common areas.
According to developers who helped craft the legislation, the liability problem has shot down a lot of bulk purchase deals that could have contained a lot of Fort Lauderdale foreclosures and other vacant properties in Florida. Bulk deals were being canceled because investors were reducing their price offers to incorporate the liability risks, prompting developers to reject their offers.
According to Jack McCabe, chief executive of McCabe Research and Consulting, the number of bulk purchase deals will surely increase in 2010 if the bill is enacted.
The bill also enables investors to acquire some ownership rights, such as the ownership of rights to common areas around pool facilities if the investor purchases at least 50 units near the pool.
The foreclosure and resale of distressed units to prevent the increase of vacant units will also be facilitated under the new legislation.
According to proponents of the bill, members of HOAs suffering from the effects of delinquencies by other unit owners have expressed support for the bill. Senator Sobel said she hopes that the bill would eliminate restrictions on loans used to purchase units in condo projects with delinquencies and unsold units.
To make the new bill acceptable to most parties, bill proponents included some concessions, such as the prohibition of bulk investors from voting to waive HOA funding reserves.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.