Wednesday, April 28, 2021
Thursday, April 08, 2021
This repost of an article I wrote in 2015 was prompted by a couple of recent conversations about condo boards overstepping their authority. There are a few condo boards in our area that are notorious for making the owners' lives miserable and they often overreach in their zeal to annoy. Enjoy.
Has Your Condo Board Gone Rogue?
Here we go again. Condominium boards exceeding their authority (or shirking their duty) is so common that I am no longer surprised when I hear crazy stories about a Board, officer or management company making up procedures to suit their own agenda. Without enforceable guidelines it would be next to impossible for a group of people to fairly share ownership and maintain reasonable living conditions in a property. If that group doesn't understand the laws and guidelines they are at the mercy of the overreach or indifference of the Board.
The State of Florida was kind enough to enact a long and detailed Statute (The Condominium Act) that spells out how condominiums shall be formed and run. You can read the entire Statute here. Each individual condominium also has a Declaration and By Laws detailing governance and use restrictions for that condominium. Condo owners are advised to read and understand the Declaration and By Laws for their association. Note that the separate Rules and Regs issued by your Board may not be legal nor enforceable.
With all the legalese of the governing documents, it can be confusing as to exactly what rights owners and Boards have. Not surprisingly, Boards and management companies routinely act in ways that violate the Act. Often unintentionally, sometimes not.
I saw a Cocoa Beach condo board run a sales contract through first right of refusal when no first right existed. In that case it was a misunderstanding not an illegal conspiracy. I have seen a management company insist on offering a contract out for first right contrary to the procedure in the Declaration. That case was also a misinterpretation not intentional misbehavior.
Now on to outright conspiracies. There is a condo in Cape Canaveral that has for years tried to keep sales contracts secret from owners who have first right of refusal. This has gone on with cooperation from the management company. They recently stepped up their illegal activities and skipped the first right process altogether in clear violation of their Declaration. Another Cocoa Beach oceanfront condo added an illegal use restriction to it's Rules and Regs and backdated the document to make it appear as if it always existed. They should have made sure there were no former copies still in existence. Busted.
The incident that prompted this post occurred at an otherwise beautiful Cocoa Beach condo that just happens to have a particularly nasty management company. The management company has been a fairly constant source of grief for owners and tenants and I have heard many stories over the years. The Board tolerates the manager's actions and possibly supports it. I was sent a copy of one letter from the manager threatening to fine an owner. The threat was not illegal, but the manager did not have the authority to levy a fine. That is a clear violation of the procedure spelled out in the Act. Hopefully, the Board will follow the law if they start following through on the manager's frequent threats of fines. If not, and no one stands up to them, the grief will continue.
The Condominium Act is very clear about fining procedure. Neither the management company nor the Board can fine an owner or a tenant without first issuing a 14 day notice of a hearing before a committee of owners who are NOT Board members nor residents of a Board member's household. The committee can either confirm or reject the fine. The Board can't levy a fine without following this procedure and receiving the committee's confirmation. If you receive notice of a fine absent the procedure, inform the Board and manager that they have violated procedure and do not pay it until procedure has been followed. Your non-Board committee members may stand up to a bullying Board or manager and reject the fine. Not all fines are undeserved nor are all Boards and managers bullies. The procedure is there to give some check and balance to the fining process. Use the privilege wisely should the chance arise. As always, knowledge is power.
From the Florida Condominium Act Chapter 718.303 (b):
A fine or suspension levied by the board of administration may not be imposed unless the board first provides at least 14 days’ written notice and an opportunity for a hearing to the unit owner and, if applicable, its occupant, licensee, or invitee. The hearing must be held before a committee of other unit owners who are neither board members nor persons residing in a board member’s household. The role of the committee is limited to determining whether to confirm or reject the fine or suspension levied by the board. If the committee does not agree, the fine or suspension may not be imposed.
"If you smell something, say something." __Jon Stewart
Saturday, March 27, 2021
In a much-circulated article this week, the Wall Street Journal reported that there are more real estate agents than properties for sale in the US. It's been that way for a long time in Cocoa Beach and Cape Canaveral. If I search for a Cocoa Beach agent on Zillow, I get 250 hits. That is 200 more than the number of agents who have listings in Cocoa Beach and Cape Canaveral and 165 more than the total number of residential listings in the two cities. How can this be sustainable? It's actually worse than it looks. In addition to the 250 there are agents like myself that aren't part of the Zillow scrum so the number of pigs at the trough far exceeds the capacity of our tiny and shrinking feed bucket. Except for a handful of super agents and teams, the majority of the agents who do manage to list or sell a property here will only record one or two transactions in a year. With total residential inventory of 85 properties that is rapidly shrinking, I think we can safely expect many agents to reach a crisis point this year. Many of them already work out of offices off the beach so they can shift their focus to their home markets. Those working out of beach offices will have to either accept lower income or start crossing bridges to Merritt Island and mainland markets. Those markets are experiencing similar inventory drawdowns so competition among agents will get even more intense. I see no reason not to expect hungry agents to begin offering discount services to keep food on the table. Compete or eat is an easy decision.
Prices. They're ranging between high and ridiculous. We've had ten units without garages sell in oceanfront complexes since January 1 for over $300 per square foot. We're at and above 2006 peak prices in many older buildings. Conditions are different now but I would still advise buyers to be cautious. As I was writing this a new listing for a small oceanfront one bedroom unit hit the market at the incredible price of $459,900. Successful buyers will probably have to pay above fair value if they hope to purchase something but there is little need to blindly pay asking price or above without first knowing what fair value is. In the case of the $459,900 unit, the comps suggest fair value as possibly six figures less than asking. Having said that, there may be someone willing to pinch their nose and pay it.
I watched two surfers on foil boards being whipped into waves by jet skis way offshore last Sunday during the big beautiful north swell and get rides that were several blocks long at speeds that a regular board can't achieve on the same waves. When I caught my first small wave on a heavy 10' rental several decades ago I never dreamed that one day I'd see surfers flying along on tiny boards that didn't even touch the water while riding wave after wave for over a quarter mile. I feel old. Happy Easter everyone.
"Some of it’s magic, some of it’s tragic, but I had a good life all the way." __Jimmy Buffett
Monday, March 15, 2021
In the short section of south Cocoa Beach between Patrick Air Force Base and the fork in A1A there were over 200 new condo units either under construction or slated to break ground shortly. Cheapest asking price was a lower floor Magnolia Bay for $549,900 which hadn't yet broken ground. The delay they experienced pushed their completion past the beginning of the crash and almost all investors walked away from their deposits without closing. That became common with projects that didn't close before 2006 and we saw several defaults from developers including several of those projects in south Cocoa Beach. When the buyers disappeared, some developers began renting unsold units to keep a little cash flowing with one converting an entire oceanfront building into vacation rentals. That latter one worked out quite well from what I can tell with the developer still holding and renting the majority of the units in the building fifteen years later.
Our inventory in March of 2005 was around 450 condo units (including pre-construction) and 50 single family homes in the two cities of Cocoa Beach and Cape Canaveral. That inventory would go on to more than double in the next twelve months as the party started to wind down and new investors raced for the exits. Their departures began the wave of short sales and foreclosures that took more than five years to unwind. The inventory contraction that began as those distressed sales worked through the system didn't stop when the distressed inventory was depleted in 2012 and has continued right through into 2021. This morning I see that we have 65 total existing condo units and 14 houses offered. Fourteen houses for sale in an area with a population of over 35,000 people. We had more than three times this inventory just one year ago. We have been in uncharted waters for some time now and I have no idea how this is going to work out although we are getting into extreme shallows now. Agents who have been used to executive-level incomes will probably need to be making some consumption adjustments. I predict we'll lose quite a few of the agents we've seen working this tiny market. It happened before and is sure to repeat as sales fall with the inventory. It's as natural as poor mango years following a good one.
The Cape Spaceport has been busy with a couple of launches in just the last few days. SpaceX now has over 1200 satellites deployed in their Starlink constellation which is bringing fast internet to remote areas worldwide. The Falcon rocket from yesterday's launch landed on the drone ship offshore completing it's ninth space mission. It's amazing to see the rapid advances in space flight and research and I feel fortunate to live in a place where I get to see some of it firsthand.
"I would exercise caution with pre-construction condos and be aggressive (low) with offers. We have shifted from a seller's market to a buyer's market in high-end condos in a very short time." __Larry - March 4, 2005
Wednesday, March 03, 2021
In 2020 we had the 2nd highest number of closed sales of condo units in Cocoa Beach and Cape Canaveral since 2005, only four closings less than 2018's record sales of 734 units. That we did that during a pandemic and with about half the inventory of 2018 is a head-scratcher. We averaged about 140 units for sale at any one time in 2020 and are sitting at 84 existing units for sale this morning March 3, 2021. Can we do it again in 2021? If January and February are any indication the answer is yes. We closed 121 units in those two months this year compared to 91 in the same two months last year. We had sold a number of units equal to the entire inventory by February 12, just six weeks. Prices being paid continue to confound and I have promised myself to never again say "Good luck getting that" when I see a new overpriced listing. Having said that, as I look through the available listings I see a high floor direct ocean unit in Cocoa Beach with a garage asking $250,000. Even needing updating, that seems quite fairly priced considering the recently closed sales. Homework, y'all.
How about single family homes? In the first six weeks of 2021 there were 17 closed sales. Inventory of existing single family homes this morning in Cocoa Beach and Cape Canaveral is 13. Thirteen!
Good luck to everyone looking to buy. It's as competitive as it's ever been and the good listings are going to those who are able to react quickly. I just closed a sale with a young agent who called immediately after a new condo listing hit the market and went to preview for his out-of-town clients and wrote an offer on their instructions site-unseen before the rush of other agents and buyers had been in the unit. They have an oceanfront unit today only because their agent was proactive and they trusted him. Out of town buyers need to find a buyer's agent they can trust and be prepared to offer on her recommendation without having physically toured the property. Inspections can be done after the unit is under contract. Obviously a buyer needs to determine what features they must have and convey that to their agent and have some flexibility should not all the boxes be checked by a particular property. Did I say find an agent you can trust? Paramount.
"Jazz students will study these key changes for decades to come." __@Elimatas1 on the National Anthem as sung at CPAC 2021
Sunday, February 28, 2021
How about that moonrise Friday night? As seen in south Cocoa Beach (left). ___________________________
In this post I'm going to address an often-overlooked, yet very important issue that condo buyers need to understand before they begin their search for the perfect condo at the beach. If you're already a client, you know the drill and have heard the sermon, so, you can just skip to the quote.
In addition to amenities, view, association health, building condition, parking and all the other items that a condo purchaser should review, a prudent buyer also needs to understand the implications of rental restrictions and how they will affect his use and cost of ownership. Cocoa Beach and Cape Canaveral condominiums evolved in a different direction than many coastal Florida communities with the vast majority of condos here restricting rentals to a minimum of at least one month and ranging up to 12 months. The number of ocean complexes allowing weekly rentals in Cocoa Beach and Cape Canaveral is only about a dozen. The rental habits of our visitors makes these particular complexes the overwhelming best choice for owners who want the most flexibility for mixing personal use with income or for investors who want the maximum income possibility.
We have two distinct visitor seasons here, snowbirds in the cold months and vacationers in the summer. Our snowbird visitors typically stay for periods from a month to several months. Our summer guests are predominantly one-week vacationers. For condo owners in a 3-month minimum rental building, chances are high for finding a renter for three months or more in the January through April period, but finding a 3-month renter during the rest of the year can be difficult if not impossible. An owner of a weekly rental can usually count on renters during the entire year although much slower in the Labor Day to Christmas period. For owners of units with a six month or longer minimum, the choice is usually between a long-term tenant, which takes away the personal use option, or not renting at all to leave it open for personal use, which takes away all income.
For those not wanting or needing income, complexes that have longer rental periods may be preferable as they are typically quieter with more permanent residents and less visitors and the facilities like pools and tennis courts are less crowded.
If you're looking for a condo, determine in advance what your needs are for income and/or personal use and narrow your search to those complexes that match rather than finding out after purchasing that your plan of having a great beach getaway that also spins off a little income isn't realistic. If your buyer's agent hasn't asked you about your needs in regard to use and income or hasn't briefed you on the implications, fire her immediately. Why work with Eliza Doolittle when you can have Marie Curie?
You know, it occurs to me that the best way you hurt rich people is by turning them into poor people. ___Billy Ray Valentine
Friday, February 12, 2021
That didn't take very long. This morning we have a total of 107 existing residential properties listed for sale in the Cocoa Beach and Cape Canaveral MLS. Ninety of those are condo or townhouse units and 17 are single family homes. Median price of available condos is $339,000 and buyers looking for a single family home in our two cities for less than $500,000 have three from which to choose. Fifteen homes have closed since January 1. I have no idea how this rapidly worsening inventory crunch will resolve itself but the immediate effect is rising prices.
Cocoa Beach residents age 65 or above are able to receive a Covid vaccination at one of the Publix supermarket in Cocoa Beach with an advance appointment. Appointment reservations are usually available at 7 AM Mondays, Wednesdays and Fridays at this website. The website will refresh every 60 seconds until a position is available at which point a screen will appear asking for information. Medicare recipients will need their Medicare number which is on the red, white and blue Medicare card. It may take several tries as Brevard County only has a couple of thousand doses available on each day. Good luck.
"The hottest places in hell are reserved for those who, in times of great moral crisis, maintain their neutrality." __JFK
Tuesday, February 02, 2021
Today the MLS inventory of condos and townhouse units for sale in Cocoa Beach and Cape Canaveral will likely hit 100 total units. The decline from 1200 units in May of 2006 to 100 today has been relentless. The flush of sales that began in late 2006 had the supply down to 500 units by 2010 and below 250 by 2015. The decline never slowed. The story for the single family home market has paralleled that of condos and we have a grand total of 20 existing homes for sale today in the two cities, only three of those asking less than a half million dollars.