Guest Commentary by Tom Steck, Florida Realtor

This question seems to surface in homes north of the Mason-Dixon Line about the middle of February every winter, and although the answer at first would seem to be a simple "yes" or "well, maybe", there are some other questions you should consider.

First, of course, is can you afford a condo? (The word is short for "condominium", which comes from two Latin words: com- "together" + dominium "right of ownership", from Wikipedia.) If you have some assets that are available and are not committed to any purpose, then at least you have the option to consider buying a second home. (This would be a good time to talk to your accountant or tax preparer about your plans!)

If buying a condo means you have to do so with a mortgage, again, the tax implications need to be thoroughly investigated. Also, condo purchases in Florida generally require a down payment of anywhere from 20 to 30%.

There is a simple reason for this: in the past few years, numbers of speculators and investors bought condos using mortgages, and quite often "flipped" them. In other words, the speculators turned around and put the condos up for re-sale (sometimes even before they closed on the properties) at an increased price, many times before the unit was even completed if it was new construction.

Let's say that in past years, only 10% down was required to buy a condo. Mr. or Ms. Speculator has $100,000, uses the cash as a down payment on 10 different units costing $100,000 each, and "flips" each one for $120, 000 apiece. All of a sudden, there is $200,000 more sitting in the speculator's bank account. This little plan worked perfectly for several years, and was based on a sometimes unspoken assumption: that home values would continue going up like department store escalators.

Well, everything that goes up must come down, and unfortunately for the speculators, the housing industry didn't bother giving them advance notice of when that was going to occur. I personally know several folks who were in a situation similar to that described above when the bottom fell out of the housing market. Instead of those 10 condos being worth $120,000, they were valued at $80,000 (or worse, less than that figure). The speculators couldn't make the mortgage payments, (or went through what other savings they may have had), and the courts were flooded with bank foreclosures. In Florida, a foreclosure action requires a court order.

Now, let's say you already own a condo here, and your complex has 40 units. If speculators had "discovered" your complex and bought 10 or 15 units, now you plenty of parking space since there are a number of vacant units around you. The monthly maintenance fees are figured by taking the total cost of lawn work, painting, water, sewer, common building insurance, roof repair, etc. (all the costs usually included in a Florida condo's maintenance fees), and dividing that number by the number of units, and then by 12 (for the months in a year). If the speculators couldn't make the mortgage payments, they certainly couldn't care less about the maintenance fees, and since the banks haven't taken possession yet, the banks aren't responsible; who gets the bill? You, Mr. condo owner, re-divided amongst the unit owners who are still making mortgage payments. Since your monthly fees have now increased beyond what you had allotted, your unit is foreclosed upon, and so the snowball keeps rolling on.

Fortunately, this only happened in relatively few complexes in Florida, due to careful fiscal management by the various condo association officers, who are elected from amongst the unit owners (and under Florida law are subject to lawsuitsfor fiscal mismanagement).

As a result, since banks are now very wary of being caught with even more properties in their foreclosed inventories, they have decided to only "bet" on relatively sure things, like homeowners who can come up with a a 25 or 30% down payment.

Now that you're scared out of your wits, you decide there's no way you want to go through all these headaches. Then, you look out the window at your front lawn, covered with a blanket of softly-falling snow – "Honey, start packing; we're going to Florida!!"

For more information or for a free consultation, contact The Law Offices of Charles D. Scott, PA Injury and Family Law Attorneys, by calling 727-300-4878 or view our web site http://www.yourstpetelawyers.com

Condominium law, florida condominiums, real estate in florida

Legal Notice

This notice applies to all content on this web site as well as the Florida Law Blog. The law firm of The Law Offices of Charles D. Scott, PLLC practices law in Florida only, and only accepts clients for legal matters within the State of Florida. This web site and the Florida Law Blog are owned and operated by S & F Media LLC. Visitors to this site should not rely on any information contained within this site when making legal decisions or handling legal matters. This site does not constitute legal advice. Always seek the advice of a lawyer before making any decision or taking any course of action on any legal matter. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide ask us to send you free written information on our qualifications and experience.


This website is owned and operated by S&F Media, LLC

Contact The Law Offices of Charles D. Scott PLLC

St. Petersburg, FL Office
1135 Pasadena Avenue South, Suite 104
South Pasadena, FL33707

P. 727-300-4878

Connect With Us