News Story (Massachusetts, Pennsylvania)
Seth Freed Wessler
NBC News
October 6, 2014
Link to story
Tags: Consumer Protection
Organizations mentioned/involved: Greater Boston Legal Services (GBLS), Voices for Civil Justice
DETAILS
Although Mack says she has always paid her mortgage on time—and unlike her neighbors in her three-unit building, survived the foreclosure crisis of 2010—she has been subject to a questionable practice that housing advocates are calling a “condo takeover scheme.” Real estate investors first buy up foreclosed condo units in a building, then take control of the building’s condo association, which allows them to set condo fees at whatever level they choose. Advocates say that by inflating these fees beyond what occupants can afford, they place longtime condo owners like Mack at risk of being priced out of their homes.
***
It’s not clear how widespread the condo takeover tactic is, but stories like Mack’s have emerged occasionally in other parts of the country in the wake of the foreclosure crisis. In 2012, condo owners in a Reading, Pennsylvania, subdivision were pushed out of their homes after a real estate development company bought up foreclosed units in the complex and then took control of the association. Using a Pennsylvania law, the investor then dissolved the condo association, allowing it to place the nearly 100 units in the complex for sale.
***
“They just forced their way into control of the condo association,” said Nadine Cohen, Mack’s attorney at Greater Boston Legal Services. “[Mack] was the association trustee but [City Realty] acted like there wasn’t a trustee and took control.”
***
Mack’s attorney at Greater Boston Legal Services, Nadine Cohen, says what her client is experiencing is “a new kind of takeover scheme that we think is picking up steam.” Greater Boston Legal Services lawyers say they are currently looking into at least six cases like Mack’s in Boston.