How much uglier can it get ?

The "preconstruction blues" are not over yet. From both sides, trying to avoid responsibilities have become the accepted norm. In this particular case, partial refund of a deposit should be a "no-brainer", as stipulated in the contract. Not so fast said the attorneys. Should the judge side with buyers, or with developers?

I leave it to you to decide.

We read today in the DAILY BUSINESS REVIEW – FEB. 4, 2010

Judges join buyers’ frustration over litigation delays

ICON Brickell

For months, lawyers for condo buyers have complained that Related
Group is improperly delaying litigation over deposits, but judges have
joined the chorus accusing the giant developer of dragging its feet
and ignoring a court order.

Related, one of the largest condo developers in the country, is
defending lawsuits involving more than 1,000 purchase contracts. In
most cases, the buyers failed to close following the meltdown of the
condo market and they are trying to get their deposits back. Under
federal law, buyers in condos with more than 99 units are entitled to
any money they put down in excess of 15 percent of the purchase price.

In one recent order, Miami-Dade Circuit Judge Peter Adrien said
Related ignored his order to refund a portion of deposits to a group
of buyers in the 1,796-unit Icon Brickell project in Miami.

In another order, Judge Lynn Gerald Jr., a circuit court judge in Lee
County, cited Related’s legal delays.

“Through [the] entire case, the defendant has constantly missed dates
on which they were supposed to file and/or filed something at the last
minute just apparently to delay the proceeding,” Gerald wrote in an
order denying Related’s motion to vacate his ruling. “It is clear that
the defendant has failed to establish excusable neglect.”

Related is appealing both orders.

Betsy McCoy, vice president and associate general counsel for the
Related Group said she is “deeply offended” by the judges’ orders and
said the problems they cite are isolated cases.

“Do you think I would risk my reputation for the Related Group when
I’ve got 22 years of experience as an AV-rated lawyer?” she said.
“There are legitimate reasons for these defenses.”

Judge Gerald didn’t buy Related’s reasons for delaying responses and
then seeking to vacate a judgment in a case involving a dispute over a
$132,000 pre-construction deposit on a unit in the 240-unit Oasis
Tower 2, a Related project in Fort Myers.

Peter Huy, the attorney representing the two buyers in that suit, said
there is a pattern in Related’s actions.

“You can see a complaint is filed, then they file a notice of
appearance to avoid default, then they file motions for enlargement of
time, then the day before the hearing they file an answer or something
else to avoid a judgment,” he said.

“When they are hit with a judgment they file a motion to vacate and
even after that is denied they still don’t return the money.”

Huy said he has a hearing in two weeks to compel a title company
holding deposits in escrow to release the money to his clients.

Related has appealed the case and claims the money should remain in
escrow until the dispute is resolved. McCoy said this is an isolated
case caused by “service issues.”

“That case had to do with logistics,” she said. “We didn’t receive the
paperwork that was served by the council. The mail was going to the
wrong place. That order is outrageous. It was a procedural error on
our side and I think [the judge] went way overboard on his findings
and I don’t think the 2nd [District Court of Appeal] is going to agree
with him.”

‘STILL PLAYING GAMES’

Related has also “chosen to ignore and intentionally violate” orders
to release partial deposit refunds to buyers, according to an order by
Judge Adrien in the case involving Icon Brickell.

The court gave Related 10 days to return escrowed deposits exceeding
15 percent of the purchase price.

The contracts say buyers are entitled to refunds exceeding 15 percent
of the purchase price if they default on the contract.

Since the order was issued in December, Related has returned money to
about 41 buyers, said attorney Robert Cooper, who is representing the
buyers of 150 units in the case who have paid a total of about $23
million in deposits.

Cooper said Related refuses to return money to about 102 buyers who
received letters of default after August, claiming the order only
applies to buyers who defaulted before August. Related also said it
cannot return money to seven buyers because there are discrepancies in
the spelling of their names on the contract and the lawsuit.

“They are still playing games and are simply ignoring the court
order,” Cooper said.

The first order demanding that Related return money was issued last
August. Related contends that only buyers who received default letters
from the company before Judge Adrien issued the order have the right
to refunds. Last month, the judge amended the order to include all
buyers seeking refunds, but Related said the judge “did not have the
right to amend or alter” the order.

“You can’t decide to add buyers to an order,” McCoy said “That’s a
violation of Florida law — granting relief with no motion. He has no
jurisdiction to do this.”

PROTECTING BUYERS

McCoy claims she is protecting the buyers’ interests.

“Judge Adrien’s willingness to order the partial refund with no record
evidence whatsoever of who the buyers are and who may have contract
right of interest lead to a mess … [we have a duty] to be sure only
buyers having an interest in the escrowed deposits receive money from
escrow,” she said.

McCoy’s appeal and a motion to have Adrien removed from the case are
pending before the 3rd DCA.

She said a buyer is not in default until the developer notifies the
buyer of the closing date and the buyer fails to close.

Attorney Michael Schlesinger , who represents several buyers of units
at Related’s 500 Brickell, said that even when the buyers have letters
of default, Related’s attorneys still try to avoid returning the
partial deposit.

“Every single order that I have gotten requires them to pay back the
amount exceeding 15 percent,” Schlesinger said. “They have not
complied. Do I think this is intentional? I believe so. They are
holding the money and they are earning interest.”

He said Related has denied his 500 Brickell clients were in default.
And even after the letters of default were filed with the court,
Related refused to return the partial deposits.

“They delay everything. They fight everything. McCoy doesn’t return
phone calls or e-mails,” Schlesinger said. “I wonder if she is
exercising her diligence as an officer of the court by handling so
many cases by herself and in-house”

McCoy has asked for extensions in dozens of Related cases, citing the
overwhelming number of lawsuits the developer is facing. She said she
is not working alone and has some of the “top condo lawyers in the
nation” as co-counsel.

Boca Raton attorney Eric Neuman, who also represents buyers in
disputes with Related, said the company’s actions are frustrating.

“Whoever holds the money holds the power and the longer they hold on
to these deposits the better it is for them,” he said. “Plus, most
buyers have limited resources. How long can they go on paying a lawyer
to pursue a lawsuit that is continually being stalled?”

McCoy said many lawyers working condo disputes are paid on a
contingency basis, which makes them push for speedy resolutions.

“I suspect that many buyers’ lawyers became involved expecting easy
and fast pay offs. There is no automatic right of refund,” she said.

She said the lawyers’s claims are absurd.

“I take great exception to any suggestion that the Related Group has
delayed cases’ progress,” she said in a written statement to the Daily
Business Review. “Please be assured we are represented by very
competent counsel and not a one would compromise their own reputation
for the sake of one client.”

McCoy said she is being cautious in defending Related’s rights during
“unprecedented times in the real estate market of South Florida.”

“As the largest condominium developer in the United States, we have a
duty to defend these cases in a responsible and intelligent manner.”

Henry B. Nathan is a Real Estate professional at United Realty Group Inc.

Visit my website: http://www.condo-southflorida.com/ where you can search for Hallandale Beach Condos, Sunny Isles Condos

Falling prices spur more tax assessment appeals

Did I write enough about property taxes, and their relationship with our cities and counties?

Here is some more.

Almost everybody in this country seems to be on the same page. Economy is not what it used to be. People make less money, get pay cuts, fall into the jobless class, or are just afraid of spending as they used to. Which in certain ways is beneficial in the long term for a sustainable economy, a society more focused on happiness, education, family and values than on consumption.

Everybody knows that we must reduce a bit our spending, and sacrifice some of our superfluous expenses.

Everybody, except our South Florida cities and counties.

Lower property values? lower assessments? Lower appraisals? How can our cities and counties live without their ever increasing income? They just raise the tax rate and like magic, everything is balanced again.

Except that this is reaching a level where we citizens cannot afford it any more.

I often talk to foreign buyers and once they compare the cost of ownership in Florida to what it is in their countries, they are outraged. Condominium costs, insurance costs, taxes, are just too high.

Our own Florida residents have now second thoughts about that "American Dream" of owning their home, when the costs go out of hand.

Or if they already own their home, they just give up, after trying to balance their own budget, against the constant flow of higher bills and increases for water, trash, insurance, sewer, taxes, you name it.

The solution? Perhaps we should give up our homes and condos, our gardens and pools, our bedrooms and bathrooms, and just go rent or get lost in another friendlier state.

Or perhaps send the message to our public officers that enough is enough.

That we have given them the authority to govern us, not to abuse us.

We can live without their dozens of departments, comptrollers, directors, managers, committees, boards, employees, pension funds, traffic cameras, and other niceties.

In reality we are ready to give up all these luxuries, that our elected officers seem to enjoy so much.

Because we want to keep our homes.

I got this thought when I was reading the following article from:

Daily Business Review - February 03, 2010

Property taxes and homeowner associations

Owners of apartment communities in South Florida have a message for
their county property appraisers: Get ready for a showdown over 2010
tax assessments.

A spate of recent apartment property sales in the tri-county area —
which followed more than a year of relative inactivity in the sector —
has established pricing levels for apartment complex owners, tax
consultants and appraisers. Armed with new data, they are mobilizing
for a jump in property assessment disputes.

Investors have been snapping up properties at significant discounts,
the result of distressed sales brought on by the collapse of the condo
conversion boom of 2004-2007. And the prices are so low that often
complexes were purchased for much less than the properties are
assessed for tax purposes.

Although the investors got the properties cheap, many are struggling
with soft occupancy levels and declining revenue, said Robert Given,
CB Richard Ellis’ executive vice president of investment properties.

“From 2007 to now, we have had on average anywhere from a 10 to 20
percent decrease in net operating income in [apartment] communities
from the peak,” Given said. “The decrease is from rental collections
being down from more vacancies and concessions being provided to
renters.”

That’s putting pressure on owners to cut costs, including taxes. And
property tax assessments, which are based on sales recorded in the
previous year, have not caught up with the latest values.

South Florida apartment complex owners have become “edgy” in
anticipation of lower assessments, said tax consultant Christopher
Bates of Wilton Manors-based Property Tax Consulting Services.

Taxes are always a major issue for apartment investors who factor
assessments into cost projections when considering a potential
purchase, said Carlos Berner, managing director of Acumen Real Estate.
Acumen has acquired two South Florida rental communities since
December: Coral Vista Apartments in Tamarac for $30.93 million on
Friday and Banyan Lake in Boynton Beach through an $18.8 million loan
assumption.

Berner said his company isn’t concerned about assessments for Coral
Vista ($23.48 million) and Banyan Lake ($17.01 million). But Acumen
has walked away from several recent prospective purchases because of
over-assessment fears.

“We have looked at different opportunities where tax issues did not
allow us to go forward at aggressive pricing,” he said. “You never
really know if it will become an issue but we err on the side of
caution.”

Property appraisers from Miami-Dade, Broward and Palm Beach counties
are aware of the decline in rental apartment values, Bates said, but
that doesn’t guarantee there will be a widespread reduction in
assessments this year.

Under pressure to reduce budgets during the recession, municipal
governments cannot afford to lose substantial property tax revenue.

Appraisers “are trying to hold their values to secure as much tax
[revenue] as they can,” Bates said. “Property taxes are becoming a
moving target. The counties recognize the huge downturn; they just
have a hard time keeping up with it.”

One appraiser, Broward County’s Lori Parrish, acknowledges apartment
complex owners are in line for reduced assessments this year.

Broward is set to start making mass appraisals of the county’s
properties today, Parrish said. The county had more commercial
property owners appeal their assessments in 2009 than ever before, and
this year is expected to be just as busy.

“Prices are going dramatically down,” Parrish said. “We run sales
assessment ratios monthly and see it keeps trending down. Hopefully,
[in addition to lower assessments] it will affect rents and those
folks who live in rental communities will see a reduction in rent, if
there is a reduction in [property] taxes.”

Palm Beach County has not begun appraising specific rental properties,
but the appraiser’s office anticipates lowering assessments across the
board, said senior appraiser Robert Samson, who handles multifamily
properties with 10 units or more.

“We haven’t reached decisions yet on 2010,” Samson said. “We do know
that most of the commercial submarkets took major hits last year. We
will be reducing values but are not sure by how much yet.”

In Miami-Dade, property appraiser Pedro Garcia has sent letters to
20,000 property owners — many of whom own rental apartment properties
— requesting information about rental revenue and expenses, Garcia
said. That information, along with comparable sales data, will be used
to determine whether to reduce assessments this year.

“With apartment buildings, you have to be careful” when appraising, Garcia said.

“There could be bad management, or a property is not kept in proper
condition,” he said. “We have to verify everything before making
decisions.”

Critical Evidence

Will the anticipated adjustments from appraisers satisfy the apartment
complex owners enough to keep them from filing appeals to already
swamped value adjustment boards?

Not likely, said Tal Frydman, vice president of investments at Marcus
& Millichap.

“Owners who are not selling right now are not too thrilled with prices
other properties are selling for in the area,” Frydman said. “And a
lot of my clients who closed [on purchases] are going in and trying to
get their taxes lowered significantly. Very few have been able to
successfully get [assessments] lowered ... a lot of buyers have been
frustrated.”

Several apartment complex sales completed late last year gave
multifamily experts evidence that the market is at or near a bottom.

“I can’t imagine values getting much lower,” Frydman said. “The only
way prices go down further is if more distressed deals hit the
market.”

The prices the properties sold for, compared to current assessments,
hint at battles ahead between owners and appraisers.

“If you look at values from November 2009 or before, assessments are
high because the appraiser didn’t have anything to prove values were
decreasing,” said Brad Capas, senior director of apartment brokerage
services at Cushman & Wakefield.

“Property appraisers [now] have better market data, and I would like
to think that would result in lower assessments,” Capas said. “If come
November appraisers haven’t dropped values to where the market is
believed to be, owners will be much better equipped when going into an
appeal.”

Recent Deals

On Dec. 31, Coral Gables investor Jose Milton bought the Colony at
Dadeland apartments in Miami-Dade County in a short sale for $21
million, a discount of more than $34 million from what seller Colony
RB-Gem paid in May 2006. Colony had planned to convert the 334-unit
complex into condos.

The complex was most recently appraised by the county at about $30
million, however. Calls to Milton were not returned.

Earlier in December, Aventura-based Advenir paid $17.6 million for the
280-unit Lakes of Margate complex at 5750 Lakeside Drive. That
property is assessed at $18.65 million by Broward County.

Advenir president Stephen Vecchitto did not return calls.

Click play to listen to Robert Given

While being overassessed by $1 million might not seem like much,
Advenir could have a strong case if it chooses to appeal. Adjustments
by property appraisers generally bring assessments down to “anywhere
from 70 to 90 percent of what the [sale price] was,” Given said.

Options for owners

Besides recent sales data, apartment complex owners should be
bolstered by a bill passed by the Florida Legislature last year.

The bill amended an existing law to lower the standard of proof for
taxpayers who challenge their assessments. Instead of requiring that
taxpayers present “clear and convincing evidence” their taxable values
should be reduced, the “preponderance of the evidence” is the new
standard.

In the past, appraisers, through the clear and convincing evidence
standard, were presumed to be correct. Taxpayers had to present
overwhelming evidence to value adjustment boards that the appraiser
overvalued the property.

Now, the taxpayer, through the preponderance of evidence standard,
only needs to show “substantial evidence” that the assessment is
wrong. Substantial evidence could be proof that a property was
incorrectly classified by the appraiser, that it qualifies for
exemptions that were not applied, or that a property was appraised
differently than a comparable property.

“Property appraisers statewide no longer have the presumption of
correctness,” Bates said. “Before, the most difficult thing to do was
prove that. [Appraisers] have lost their edge in appeal hearings.”

Meeting with Appraisers

Multifamily investors who do not want to wait for appeal hearings can
schedule a meeting with the appraiser’s office after the assessments
are initially made public, Parrish said. That policy also applies to
Palm Beach and Miami-Dade counties.

The first posting of assessments are generally around May 15.
Miami-Dade plans to release its preliminary assessments on June 1,
Garcia said.

Property owners have 25 days to file with the county from when Truth
In Millage (or TRIM) notices are mailed out in August. Palm Beach
County does not anticipate releasing assessments before the TRIM
notices are sent out, Samson said.

Owners seeking appeals can expect a wait. Broward County is just
starting to hold hearings for 2009 appeals, while Miami-Dade County is
still mired in 2008 hearings. Palm Beach County’s backlog could not be
determined.

A successful appeal of an assessment does not always result in lower
property taxes, Parrish warns.

“Last year we lowered assessments,” she said. “But many of the
governments [in Broward County] raised tax rates substantially. When
money gets tight that’s an issue.”

Henry B. Nathan is a Real Estate professional at United Realty Group Inc.

Visit my website: http://www.condo-southflorida.com/ where you can search for Hallandale Beach Condos, Sunny Isles Condos