Their Retirement Plan Did Not Include Being Forced to Sell Their Condo | Hacker News Reader

Their Retirement Plan Did Not Include Being Forced to Sell Their Condo

nytimes.com

34 pointsmikhael27 comments

Condos are yet another example of how being poor in America is expensive.

While condos are attractive for people who can't afford regular homes, mortgages are harder to get for them. Even if you have a perfect credit score and 20% down, there is a whole category of condo called "nonwarrantable", which makes them ineligible with any lender who sells direct to Fannie Mae and Freddie Mac. One of the laundry list of stipulations is that no single person or entity owns more than 10% of all condo units in the building or development.

Condo buyers are living with risks like the article describes, and they're paying more for it to the bank for the privilege. It's a cruel joke that the people who can't afford single family home mortgages are given fewer protections and subject to a litany of HOA payments, special assessments, fees, and fines that can result in the condo being foreclosed on even if you own it free and clear.

There is a great novel "Condominium" by John D. MacDonald that lays bare the skeezy nature of condo developments. It's from 1977, and here we are 40-50 years later, still letting people get conned and maybe even die (https://en.wikipedia.org/wiki/Surfside_condominium_collapse) thanks to the numerous messed up incentives in condo development.

> While condos are attractive for people who can't afford regular homes

The people profiled in the article are not clinging to their condo because they can't afford a "regular home". They already bought a house, they just had two properties:

> In 2004, right before they had children, they moved out and into a house four miles away, so their twins could grow up with a backyard. But they always planned to return to the condo so they held onto it, renting to a trusted tenant and looking forward to retirement there.

Where's the article about how people who own two residences are depriving people with no residences?

Don't assume that these particular owners are the norm. They are highlighted in the article because of the unusual situation with the takeover by a developer.

The more typical condo buyer looks more like a senior on a fixed income looking to downsize or a first time buyer in a expensive city who can't possibly afford a single family home.

> Despite the inkling that the investor might want him out, Mr. Fellman, 57, was confident that things would be fine, since he legally owned the property, and the condo declaration required that 100 percent of owners would need to be on board for the condominium to be terminated.

> But the Scully Company didn’t stop there. Since it owned all the other units, it was able to take over majority control of the condo board, and it voted to lower the threshold of owners required to terminate down to 80 percent. Then, in February 2021, the Scully Company voted to terminate the condominium, which meant the Fellmans would be legally obligated to sell their unit to the company.

That must be so stressful to deal with. Is that legal to lower the threshold like that?

If the state condo laws say it is, then yes. This is in Florida, not exactly known for such a great body of condo law. But even in places like New York, Illinois, Pennsylvania, etc - with a long, long history of condominiums, this is going to be allowed.

All the condo units but one were owned by the company. That’s a huge red flag, to the point that you’d never be able to get a federally-insured loan to buy in this building. Generally anything less than 50% owner-occupied can’t be financed - you’d have to pay cash, your real estate attorney will tell you to run away, etc.

> All the condo units but one were owned by the company. That’s a huge red flag, to the point that you’d never be able to get a federally-insured loan to buy in this building. Generally anything less than 50% owner-occupied can’t be financed - you’d have to pay cash, your real estate attorney will tell you to run away, etc.

Of course, but in OP's story the owners bought the condo years before the real estate company had come in to buy all the other units.

So I agree that this would be a red flag but unfortunately this red flag still exists even if the condos are fully owner-occupied at the time you buy them.

I'm sympathetic to their plight, and wish them to get a good payout, but this is the basic contract of a Condo - You don't own the building, you own a slice of it, and if everyone else wants out you're gonna have to agree. They never owned their home. They owned a share in a compact that owned their home.

Where to draw the line between the rights of the majority to implement rules and the rights of the minority to refuse them is one of the central problems of civics, and there's no one right answer.

Sometimes it's even worse than that. I had a condo and then I discovered all the units were on land that was just a 99 year leasehold. The whole thing had an expiry date no matter what lol

I think it should be illegal to not disclose that info when you buy. But I guess it worked out for you when you passed the buck and sold it to somebody else…

Here, owning the condo flat means being first-class property owner, registered in public real estate cadastre, like any other real estate, while a homeowner association manages common/external parts of the building, it does not own them, and has limited authority to tasks strictly defined by law. It seems strange to me that condo ownership in US is so much weaker.

> They never owned their home. They owned a share in a compact that owned their home

That is pretty much housing cooperatives works here, while condos provides much higher legal certainty by registering members as individual flat owners.

Just FYI, nobody else knows where your "here" is.

There are multiple options in the US, the one in the article is only one type.

- you can own a “share” in a building where you have exclusive use of a part of it (tenancy in common in CA)

- you can own a unit within a multi-unit building (the entire building be a defined piece of real estate)

- you can own a legally separate unit that is a stand alone piece of real estate

In Europe you own a property inside a building and the condo is represented only by its own hoa that manages common spaces and handle simpler stuffs, nobody can force on you something more serious than cutting noises at 10 pm

Indeed. This seems another example of how Very Bad Things can happen to almost anyone apparently randomly in the US.

In Europe we've legislated much of this sort of thing away - you have to try really hard to screw things up for yourself.

First thing I noticed back in Europe after returning from a couple of years in the US - nobody was afraid.

I think here this type of activity would be possible. But solution is simply buy one from big enough company(special type of company). Thus it would be unlikely that anyone is able to gain majority and in fights there is likely enough people on sensible side. Like where I live has 126 units. No one is going to own more than half of them. And big corporations instead own entire similar buildings next door.

The thing is, efficient use of population and better housing supply relies on one thing: building vertically, and the "condo" building is a core entity for doing so.

Hammering out good and fair law to underpin this is important for many environmental and sustainable reasons.

The bylaws may technically allow this, but should it legally stand given basic rights?

The key thing here is to draaaaaggggg this out. Their desired state: stay in the condo. If they can drag it out a decade or so, it'll cost the investment people money as well. Time is on their side, if they can get it.

While it's a balancing act, they bought it with the legal understanding that they could veto certain actions because those required 100% agreement. Surely it's fine print BS to say "sure, X requires you to agree, but modifying the agreement so you no longer have to agree in the future and then immediately holding another vote does not require you to agree". At that point, there is literally no value to the first part of that sentence.

This is exactly why I tell people not to buy a condo (in the USA). In the north east you see "triplex", or a three-unit multifamily home. Usually separate individuals own each the units and all is well.

However, as life happens one unit will eventually go for sale. I've heard of a case where one of the other owners bought a unit so they owned 2 out of the 3, and then placed a very expensive special assessment to gut renovate the entire thing as it was in bad shape, but livable.

The other owner couldn't afford this and so they too were bought out at a fraction of the price.

Seems like the only problem here is a dispute about the accuracy of the appraisal. With an accurate appraisal the owners could have bought a comparable property elsewhere.

Come to think of it, given that the value of the appraisal is the main issue, it’s very strange that the owners never got their own appraisal, instead paying all these legal fees while relying on an automatically generated “Zestimate”. The fact that they were involved in a legal battle for years without ever having gotten an appraisal leads me to think that getting a fair price was never their goal, but instead they were hoping for an inflated price as holdouts. Then the NY Times writer came in, and noticing this glaring hole in their story, needed to fill it with a quick search on Zillow.

This has happened in NYC as well, but is rare in such large buildings. Every offering plan contemplates deconversion; the issue is the pricing

https://archive.is/HH9iI

"Everyone is entitled to their own opinions", yada yada.

Funny how many HNers in here are against condos, in contrast to how many are normally YIMBYs in other threads.

Personally I wouldn't want to own a condo, but I can understand the appeal.

I don't understand, is there some irony I'm missing out or something?

The appeal of condos is that they're usually cheaper than an independent house at the same area.

The comments here seem to be against condos because they lend themselves to situations like OP's where the owners are getting screwed out of their own homes.

I don't see the relationship with N/YIMBY here. Nobody here is discussing the existence of the buildings themselves, but rather the contracts and the laws around the owner's rights.

I just mean it’s ironic bc it would indicate HNers want condos to be built when they themselves would never live in them.

So it’s like, for the people that can’t afford SFHs or can’t work remote I guess.

(condo dweller here)

Well, I'm pretty sure it'd be impossible to have an independent house in my neighborhood (Chicago loop).

Unpopular when I float the idea but a suggestion is to just tax rental properties to fund rent support for retired renters. Something like that would make renting your whole working life more attractive.

More "entitlement culture" being glamourized by the New York Times.

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