I was reading this link and was so shocked I got out of bed and to my PC to type this.
I cannot sum it up with quotes other than to say, a company bought a condo complex, sold it to himself in another company. And in doing so was able to make them all rentals, and only paying those who already bought a condo a portion they appraised it for.
And in reading almost all where appraised recently (same time frame) in the 100k range. And nothing can be done about it…
Wow, that was a helluva story. I won’t be sad if I hear that something terrible happens to Mr. Timochenko, I can tell you that. Or his lawyer, Ms. Plank, either. “In concert with the law” isn’t necessarily any different than “like a totally greedy douchebag”.
Ok I am trying to work out exactly what happened here, the relevant sections appears to be:
I’m not well versed in the details of condo association law, but isn’t this flat out insane? This would be like your home owners association being able to sell your house, even if you are in violation of the bylaws they have to go to court and get a lien put on the property.
But wait there is more! It says that the woman had a mortgage which she is on the hook for, WHAT? Why would anyone give out mortgages where a third party could sell the property at any time?!
And goddamn they bought the entire condo complex for $7,500 USD :eek: Where are these sales posted again?
This is a personal anecdote, and in a totally different country to boot.
My wife had a half share in an apartment that was recently sold in a similar matter.
Here it is called an “en-bloc” sale.
There’s a lot of rules to abide by, but essentially - if 80% of the owners agree to sell at the stipulated price, there is a govt body that can force the other 20% to sell. (it is not automatic)
It sounds like this is exactly what happened here - the slimeball had enough units to “force” the sale - at a price highly advantageous to him.
Now the only thing remaining, I would think - would be for the disadvantaged owners to see if there is some sort of remedy for “bad faith” or similar in the regulations.
Here there is - if the govt body thinks the “majority owners” are treating the “minority” unfairly, or the minority are unduly diasadvantaged there are a whole lot of remedies they have at hand (from disallowing the sale, to awarding more money to the minority owners)
A key factor seems to be that the condominium association had the right to hire the appraiser. In a normal situation, the condominium association would be representing the existing owners and obviously, they would have no reason to push for a low appraisal. They would be on the verge of selling and would be pushing for the highest appraisal they could get.
But in this case, Timochenko controlled the condominium association because he owned a majority of the units. And he owned the company that was buying the condominiums. So he was in a position to push for a low appraisal, which enabled him to buy out the units he didn’t own for an unrealistically low price.
Back when I was condo shopping a couple of years ago, it was a big deal to the mortgage company that the building be at least 90% owner-occupied. I believe this was a rule that had been around for a long time, but during the real estate craziness when all the rules were thrown out - people were given mortgages without regards to owner occupancy. I saw a lot of buildings in trouble because the current owners (in 2010) weren’t plentiful enough in certain buildings (rehabs that sold between 06 and 08) for people like me with conventional mortgages to be able to purchase a unit. There were a lot of cash-only places, even if they weren’t foreclosed.
The people profiled in this article purchased their homes at the height of the sheister mortgaging craze. It seems they are twice-over victims because the mortgage companies should never have let them buy units in a complex that had such low owner-occupancy in the first place, and now they’ve fallen prey to the lovely underhanded commercial real estate side of things. I wonder if there’s any possibility they could have a case against their own mortgage companies for a real estate sale that should never have been allowed?
I googled the his name, and he is a shyster. A few years back in another area he bought, he installed separate meters for gas per unit, lowered rent by 40$ and stopped including heat in the rent. Sounds all good right? He went ahead and created a new gas company, which was the supplier to the people, raised the gas prices. To top it off… he was stealing the gas from the main supplier. http://www.justice.gov/usao/pae/News/Pr/2006/apr/timochencko.pdf
What sucks is even for the people that were lucky enough for the mortgage company to forgive the balance of their debt, they’re now going to have to pay income tax on the $40k that was forgiven. I’ve never understood how the IRS gets away with that one.