All I can say is wow.
A place that I lived in several years ago, and no do not start calling my wife and I snobs or anything as I don’t go to teas and hold my pinky finger out, had a shocking bankruptcy filing in the last few weeks. Why is it shocking?
Despite the allegations of mismanagement, which were not unfounded in my opinion, the HOA and club basically increased fees to support a lifestyle that was dying as the older residents were shipped off to assisted living facilities or just died in their homes.
From the Sarasota Observer:
The Meadows Country Club in Sarasota files for bankruptcy
Unfortunately for anyone who enjoys this course, like myself, it’s a Chapter 7 so odds are this place will go to hell in a hand basket real quick, especially if PE (private equity) gets its claws into the club.
To give someone some perspective on this location, back even before this old guy lived there it was an area where NFL football players and some famous professional wrestlers live. Now? It is still nice but was gravely neglected due to allegedly poor management of the facilities there.
Now am I saying the HOA (Homeowner’s Association) will follow suit? Not yet. But if I were to place odds on it, it is right behind. The HOA fees were increased to extremely insane levels before 2022 and elderly residents were being forced out as the fees were allegedly used to finance country club upgrades and other such frivolous items.
That’s great if one love’s summer gold tee times, but on top of Sarasota County’s property taxes? For people on a fixed income, it’s too much.
Is this an isolated incident as the economy slows?
Based on the news flow, I think not:
Green Terrace condo residents scramble to move as HOA files for bankruptcy
Condo crisis grows as 75-year-old HOA goes bankrupt under $50M debt… experts warn more at risk
It’s not just HOA’s though, imagine a builder in a neighborhood one purchased into going bankrupt.
Florida Homeowners ‘Living Nightmare’ As Construction Company Goes Bankrupt
And this won’t help one’s property values:
Shuttered Las Vegas golf course sold at auction after history of bankruptcies
What makes this is amazing is that there is no massive surge as many HOAs just increase assessments and blame “maintenance” or other issues for their problems but in reality it’s blatant mismanagement. The list is starting to grow if one follows RK Consultants on X (formerly Twitter) for examples like these:
But don’t worry, I’m sure they’ll get the pool opened or something.
Ouch.
Meanwhile back in Florida earlier this year, check this one out from the Lakeland Ledger:
Resident complaints emerge as lawsuits prompt bankruptcy filing for Polk vacation resort
Yeah, people actually signed agreements with this in it:
Though it is a vacation rental neighborhood, many of the homes are privately owned. Many of the owners are foreign investors from China, the United Kingdom and South America, Kenny said. Balmoral has marketed its vacation homes to investors outside the United States, posting videos extolling the resort on YouTube.
Balmoral offers lease-back agreements, under which the developer rents out the homes and pays the owners a fixed amount — typically 5% of the purchase price, or $20,000 a year for a $400,000 home.
The owner was responsible for property taxes, of which since they were investors were not entitled to a discounted homestead exemption. So if one did not get that lease back repayment the pain was uh, fugly for lack of a better term.
It isn’t an isolated incident for just vacation rentals in Florida either as this this story from the Gainesville Sun highlights:
Foreclosure lawsuit filed against owners of Celebration Pointe over townhome community loan
Excerpt:
The owners of Celebration Pointe, who last year filed for Chapter 11 bankruptcy protection, are now facing a foreclosure lawsuit in connection with a luxury townhome community located within the large development west of I-75, for allegedly defaulting on a nearly $6 million bank loan.
That’s brutal.
But it’s not just Florida, check this article out from the Minnesota Reformer:
HOA Files: Homeowners confront huge bills, conflicts of interest and bad insurance options
Excerpt:
Susheel Kesireddy was among the first people to move into a brand-new townhome community in Inver Grove Heights eight years ago.
He figured his homeowners association’s insurance would cover any needed repairs to the outside of his home, while his personal insurance covered the inside.
So he was stunned when he received a $16,116 bill from his HOA in January for a roof replacement due to hail damage.
If one listens to the sales pitches from these condos no matter what state, these risk questions are never answered by the realtor or anyone from the property management company in most cases.
All I can say, and I’m sure I’ve missed dozens if not hundreds of stories like all of those above, prepare for impact as builders, HOAs, property management companies and oh yeah, property owners start to default on their homes and condos in the near future. Especially as the student loan and BNPL debacle impacts this autumn.
