Plaza Resort in June
A condo-hotel unit in the Plaza Resort & Spa was under contract for a long time. Then the deal fell through, the unit went back on the market. I submitted a full-price offer and it was accepted. I was curious why the unit did not close. This was not because of financing (no such thing for Daytona Condo-hotel studios). It was a cash deal so, what could cause the deal to fall apart?
I know the Seller. She is a real estate broker running an investment brokerage for many years. We worked together on one or maybe more deals, I liked her attitude and knowledge. She bought and sold quite a few units in the Plaza… But this time she could not close for weeks and the buyer walked away.
She is straightforward and honest, and warned me that we may not be able to close. There were 4 other owners trying to close, and not able to get the Estoppel Certificate for weeks and weeks.
I told her that I needed Joanne Marchese with Johnson & Johnson Attorneys.
We have closed dozens of deals in the Plaza Resort, we both know a lot about the Plaza, know people working for the association, have read the governing documents of the Condominium. She is also a CAM and is managing one condo Association. Until 10 months ago, I was also managing another condo-hotel association as a CAM (Community Association Manager). So, between the two of us we know quite a bit and we are resourceful people. And while owners and agents are guessing what might be the reason for the delays and unexpected demands, we have a pretty good idea what it is or where to look for the answers.
The problem with selling condos and condo-hotels is that until everything is smooth, buyers and their agents do not research much at all. I don’t think many owners and buyers read the Condo Docs, and all other pertinent documents. I doubt they are familiar with Chapter 718 FL Statutes governing condominiums in Florida. They usually rely on the very limited information provided by Sellers and their agents.
For example, I often get calls about condo-hotels and the question is whether pets are allowed. When I say “No”, some do not believe me. They read listings and the listings say yes to pets. So, who is right and who is wrong?
The rules/laws and enforcement or lack thereof are two different things. I remember calling the Board member at Daytona Inn and questioning her about her statement that pets are allowed, and she insisted. When I confronted her with their Declaration, which clearly stated No Pets, she said that they did not enforce it.
There is a huge difference between “yes to pets”, and the Board not enforcing the “no pets” rule. I remember in Fountain Beach Resort many years ago the same situation ended up abruptly, after the association had a problem because of the pet behavior could potentially result in a lawsuit, and since then “No pets” is a strict policy there.
Right of First Refusal (ROFR)
I explained to Nancy L. that what the Association demanded was not something new, that it is in the Condo Declaration, and that it was, probably, because of Right of First Refusal (ROFR). How many owners even heard about it? When the new Plaza owners started following the procedures set forth in the Declaration, agents assumed that this was the change in the procedure, but it wasn’t.
I sent Nancy the section and the paragraph about the ROFR and it was news to her. Yes, any owner, who purchased the unit on the resale, unless they obtained Certificate of Waiver of ROFR, signed and notarized by the Board President, the Developer or their designee could lose their unit.
This was a shock. But it should not be. We sold way over a dozen units and went through a lot of BS from the Association managers, telling us that this was obsolete and no longer valid. The only way to make it obsolete and no longer valid is by amending the Declaration.
There were 2 amendments since the inception of the Condo-Hotel. Both have nothing to do with the ROFR. So no, it was and still is valid. It took us a long time to fight them, but since we did it once, after that we did not have a problem obtaining the Certificates. It was because the Association did not have any intention to use their Right of First Refusal.
Now, that a new company took over the Master Association, and in the Second Amendment set that they are the successful declarant, they demand it. And plus demanded the appraisal to go with it. Agents and owners are bewildered, but the Section dealing with ROFR clearly states:
If they want to see whether it is worth for them to use the ROFR, they need to know the true value of the unit. It is then reasonable to demand the appraisal.
On day one we start with a Notice to the Association by certified mail return receipt requested. Only after we resolve the ROFR issue can we request the Estoppel. So, when agents do not even know about ROFR, and request the Estoppel, don’t get upset with delays.
But this is when you know about the ROFR, and the procedure, and the Estoppel, and all that. Of course, there are tons of this that we do not know. Nancy mentioned that if the appraisal comes at more than 10% off the purchase price, the Association refuses to approve the sale. This raises the eye-brows.
I did not find anywhere in the Declaration, By-Laws, or Rules & Regulations a word about the right and/or duty of the Association to approve a buyer and the right to reject the sale based on the price, or any other matter whatsoever. This could be an “invention” by a zealous Association or NCL Owner (Non-Condominium Lot- Master Association). I did not read it line by line, I surfed through it, but I doubt I missed it.
If you ever had the pleasure of reading this “legalese”, you know that it is not easy to understand. Nancy wrote that she was carefully reading what I sent her, but she had difficulty understanding it.
Yes, it is not an easy reading.
After going back and forth, after her diving in the endless sea of conflicting information, she finally wrote to me: “I think if anyone can (sell) it will be you 👍”. And then “I’m being contacted by other owners, and I don’t want any more listings there.” So, she referred them to me.
Agents from Orlando, St. Augustine, Jacksonville, Ocala, Gainesville ask questions about condo-hotels (including the Plaza). And when I try to explain that this is complicated and suggest that they Google and read about condo-hotels in Daytona or go to my page about condo-hotels in the area, and this link about The Plaza Resort & Spa, they frown. They say that they are licensed agents and do not get information from Google.
As if using Google to learn is a crime…
To the owners of units in The Plaza Resort & Spa
You do not have to hire me if you do not want. But when hiring an agent/broker to sell your unit, get someone familiar with the issues and knowing what to do to get to a successful closing. The least you can do is give them this article, so that they can grasp the complexity of issues and the process. What I wrote here is not all, it is like an iceberg, and this is the tip of it, but it might help you to better understand the issues and be able to convey them to your agent. Do not expect the agent to know them until s/he proves to you that they do.
To the agents/brokers
If grasping the voluminous governing documents of the Plaza Resort is foreign to you, do not fool yourself. Even if you sold here before. If the Seller is your first priority, either serve them well, or refer to those who can. It may turn to be your hardest sale for the smallest commission check. This is the reality.
P.S. To read about ROFR, go to bottom of page 38 of the Declaration of Condominium and read the Section about Conveyance. If you have trouble with finding it, email me or call me 386-405-4408 and I will forward it to you.