Investors attempting to purchase all units

I am the President of an Association in SC. This Association, many years ago, was an apartment complex, changed to an Condo HOA complex in 1984.

There is an investors who is purchasing a great majority of the units out here. (Thus far, he has purchased 58 out of 120, and the number is rising weekly.) Needless to say, he and his buddies will have control of the complex in a very short while.

My questions: It appears that he and his buddies can take over the Board. At this point, he is running for a seat on the Board at our annual meeting next week. I have no problem with that. However, since there are several owner-occupants, we feel that some of these individual should also have a seat on the Board if they desire. (As a note, I am an owner occupant.) What can be done about this? We, owner occupants, have no intentions of selling to this group of investors.

Another question: I have a feeling he wishes his property management company to take over the property management from the company we currently have, which is doing a fine job. I have a problem with an individual or group of individuals owning units here, also performing the property management for a fee. I feel it is a conflict of interest. How does this board feel about this.

Another question: He wishes to perform upgrades to the property. I have no problem with this. But, our current way of doing such is to obtain 3 bids (apples to apples, per specifications) and awarding the bid to the lowest bidder, provided that company or individual passes our testing (consulting BBB, running background checks on the principals, etc.) How, would the fellow members on this Board feel about this situation?

Best wishes,

Donna

DonnaM,

Mary is right, the cow might already be out of the barn (gosh, what is Tennessee doing to me) I think that your members/owners who are afraid of what is happening to your association might be too late. Where were you all a couple of years back.? My condo assoc. passed an amendment that no more than 4 units may be owned by a single owner, corp or group which has slowed down the investor thing greatly. My Villa association just passed an amendment which states that no unit may be rented until ownership by a single person has accrued a 2 year consecutive ownership. Again, prevents the speculators from gobbling up the units in a down market. Because they don't want their investments sitting empty for 2 years, they won't buy them up. The down side? Very bad for someone trying to sell.

Anyhow, you really don't have much recourse except to pay a great amount of attention and bail out if it gets unbearable to handle. Lets just hope that this guy cares as much as you do for the association.

Donna M,
First I would contact your representative for your county. Are you in a town? Try the city council. The intent being that you shed as much light on what is going on as possible. Contact your Newspaper, see if they are interested in doing a feature story. Write the editors of all the local papers. Contact Legal Aid. Again, anythinbg to get the attention of large # of people. Shake the tree and see what falls out. I doubt this buyer wants to create a bad business image, but who knows.

I like the others view this a serious business and the signs are not good for a favorable outcome. I think a good lawyer might be able to show you the way to go. Get the folks that still own there and hire a lawyer to get solid addvice, maybe some legal aid society can help. It appears there would be a way to dampen this activity if a good reason can be raised. I really don't have a clue but I sure would turn over every rock.

he would have a vote for each deed/title/unit.

Robert,

If he is legally purchasing the units, how can what he's doing be thought of as being illegal?

Regarding an AG opinion, In AZ only a public official (ususally requested by a legislator) can request an opinion of the attorney general.

Robert,

I understand what you're saying, and I, too, would want to find out as much as possible about this guy and what his intentions are. But, I think these property owners also need to be very careful. If too much attention is drawn to this it could hurt their chances of selling should they decide to get out now. Nothing like cutting off your nose to spite your face!

I want to thank everyone for their thoughts and suggestions. Surprisingly, several years ago, when the complex was converted to Condo, over 1/2 were not sold and thus remained in the ownership of investors. Quite frankly, after many talks with the new investor, I am confident that his thoughts an suggestions will increase our property values. Granted, it will cost money, and I have set aside a good deal of money for special assessments, as we really need to implement his suggestions. His suggestions are as follows: Remove the vinyl siding and brick the complex, make it a gated complex, replace the roofs with solar roofs which can be plugged into the grid, thus saving each unit money on electricity bills. He is an environmentalist as I am, and I welcome his thoughts. (We are both type "A" personalities, and get along quite well.) If he wishes to purchase my unit in the next 5 years, I might sell it, as it is a townhouse-style (2 story) condo and I am, after all, 63 years old, will be 64 at the end of the year. Right now, I am not in the least bit interested in selling, since the values are increasing. We are in an urban area, 6 miles from the downtown business district, close to Wal-Mart and Sam's Club (3 blocks), close to very nice local shopping centers, which include Books-A-Million, Publix, and Talbots, as well as about 2 miles from a large shopping mall. There are fast-food, casual dining and upper scale dining within 1 mile. So, as you can see, the location is perfect. This area is building rapidly, mainly, due to Fort Jackson and the high price of gasoline.

We shall see what transpires. Already, I can see a difference in the make-up of the rental tenants, a vast improvement.

We have 5 owner-occupants who range in age from 60-76. There are approximately 4 ages 50-60, and the remainder are around 40 and a little over. I have owned my unit since 1987, and there are several owner occupants who have owned their units since the conversion in 1984.

If things do not go the way I hope, I will contact the AARP as well as my local State Senator (who is a son of a deceased state Senator for whom I worked), and see what can be done. The idea of a newspaper article is quite interesting. I have used that before for other situations (not involving our complex) that I have felt were unfair (mostly consumer issues.)

Best wishes to all,

Donna

The new investor owner and I get along fabulously. I did explain to him that bids (3) must be submitted for work to be performed, based on specifications (apples to apples).

My only problem is the fact that he has two other friends who have invested in units as well. Four of us on the Board are up for re-election next year, and I fully expect all 4 of us to be voted out, based on the number of units he and his fellow investors own. The only action I can take at that point will be to request minutes of the monthly meetings as well as each month's financials.

At the current time, our minutes are recorded digitally, and upon request, are e-mailed to the requestor. The financials are printed and can also be e-mailed to the requestor.

The primary investor and I are in touch every day either in person or via e-mail, so there will be no lack of communication. We agree that we need an assessment and will be working on this beginning with the June 2008 Board meeting.

I agree that, in order for him to show a profit, he must have the betterment of the community in mind. Therefore, our property values will increase.

We shall see what happens. In some ways, I am highly optimistic, but in others I have a negative gut feeling.

Best wishes to all,

Donna

Donna,

You said: "I agree that, in order for him to show a profit, he must have the betterment of the community in mind. Therefore, our property values will increase." I hope your assessment of this owner/investor is correct. But, I wonder, have you ever heard the term "slum lord"? Continue to maintain that "close" relationship, but please don't let your guard down.

Take care,
Mary

Donna,

I don't think you should assume that you will be voted off the board. If the investor and you get along well, why vote you off the board? Do you think he wants to add that to his own responsibilities? If it were me investing, I would specifically seek not to unseat the entire board. It isn't in their interest to do so.

If he wants to sell the units after the spruce up, then he will eventually lose the momentum anyway. And he also runs the risk of alienating the people he sells to. But if he keeps you seated you will represent his interest well and save him time. Further if you have to police a new owner, then you take the blame not him.

But you may want to ask him outright if he wants to replace the entire board. If you get along so well, he will understand why you would ask. And the relationship would be more likely to survive if he told you up front if he intends to replace you.

You could also use this information to help persuade him to keep at least a minority interest in the board with the current residents. Tell him how it benefits him. Also ask him if they want to resell or simply rent. If he wants to resell later it will help that transition if he keeps at least one member from the current ownership.

Well, to keep you guys and gals up to date. Our regime fees are due on the 1st and considered delinquent as of 5:00 PM on the 17th, with a $25.00 per unit late charge. The new owner owns 52 units. All day, I was trying to reach the owner to advise him that we MUST have the money by 5:00 PM today. Meanwhile, a few days ago, his wife who is also his bookkeeper (and she, although not truly blonde, acts like the stereotypical one) requested our management company if she could have a grace period to the 20th. My response, via e-mail was a resounding NO. (I was a lot more subtle when e-mailing her.)

By 4:00 we still did not have their money. I called the owner (because no one could reach his wife), and advised him we did not have the money. After several calls by our management company and me, leaving voice mails, she showed up at my door at 5:03 PM. I was not too pleased. She wanted to know why I was in such a "bad mood and so hostile". If only you guys could hear the voice mail messages she has left with our management company. God, save us all. She stated she wanted to me my friend. I do not want her to be my friend. It should be a business relationship only. Then, she refuted some of the voice mail messages she left. Then, she could not answer my query of why she has not read the Master Deed, By-Laws and Rules and Regs. As a note, and not stated to her, if she had read those documents, she would not be asking such stupid questions.

In any event, the visit was an unpleasant one. She is very immature. It is my feeling that her husband has placed her in this position with no training and no knowledge.

After her visit, I sent an e-mail to all the Board members, including her husband, and to the management company, explaining why I was in a bad mood and hostile, considering I spent 1/2 day trying to save him $1300.00.

What's your opinions?

Donna (still in a bad mood and hostile)

Run DonnaM6, hostility and all, run , run.

Seriously. I would expend my energy in consoldidating all the owner support and interest you can scrap up. If you have a website, use it, if not e-mail blasts. Generate a little movement and get people talking and asking questions about him and his company and his wife or whoever. Sometime, a little sunshine soothes the appetite of the wolves at your door. Just be smart and careful and don't go out dancing with either one of them.