West Palm condo residents win fight against bulk buyer making low-ball offers. Here's how.

At a small condominium complex on the north side of West Palm Beach, a handful of residents took on a muscular investment group wanting to bounce them from their homes on the cheap — and won.

Condo residents don't always have the ability to take conflicts to court. This is especially so when dealing with deep-pocketed, so-called "bulk" condo owners who wield power over individual owners.

But five individual unit owners at Sandpiper Village Condominiums, now known as Piper Village West, did it anyway.

They went to the Legal Aid Society of Palm Beach County, which then partnered with the Holland & Knight law firm for additional help. Holland & Knight lawyers Jeffrey M. Schacknow, Matthew Zimmerman, Seth Welner and Alex M. Englander in the firm's West Palm Beach office worked pro bono on the case, along with Joseph Grant of Legal Aid.

Last month, a Palm Beach County Circuit Court judge ruled in favor of the five Sandpiper Village owners.

"Our clients have been worried for more than a year now," said Schacknow, a Holland & Knight associate. "The judge's ruling confirmed that the law as written won't allow a termination like this. They're thrilled to have some assurance they can keep their homes."

Small West Palm Beach condo drew big investor who bought most of the units

Bulk buyers are investors who purchase multiple units in a condominium. When they own enough units, they can install their own board members and control the condominium. Sometimes, bulk buyers want to own all the units in a property.

But how they go about doing this is key.

In the case of Sandpiper Village, both residents and investors are uneasy co-owners in the 69-unit condo that dates to the 1970s. The property at 3901 36th Street is south of 45th Street and just east of North Australian Avenue.

In 2017, Piper Ventures paid $3.9 million for a bulk purchase of units. Today, Piper Ventures owns 63 units.

The condo association, Piper Village West Inc., consists of members from Piper Ventures, and the board of directors consists of three Piper investors: Yoel Jacobs, Ezra Azizi and Robert Rosenberg, who all live in New York.

With Piper in control of the Sandpiper Village condo board, the board voted to terminate the condo in 2021.

Then came the purchase offer: About $65,000 per unit to the remaining owners. That amount would be whittled down to roughly $40,000 after residents paid condo assessments imposed by Piper Ventures.

Florida law is clear that bulk condo buyers can't sweep into condo complexes and try to buy remaining units without certain rules in place, said Zimmerman, a Holland & Knight partner.

One important state requirement is the appointment of a trustee to manage the termination and obtain fair market value for units the bulk owner wants to buy, Schacknow said.

Florida has a standard process for condo terminations, Schacknow said. But in this case, Sandpiper residents had to go to court to get the state law enforced.

In July 2022, Sandpiper owners Beatrice Sutherland and Denzil Sutherland, Richard Baker, Charlene Moxey, Sherlie Joseph and H.T.M. Leasing LLC filed their lawsuit, alleging the bulk owners weren't following Florida law during the termination attempt.

With the investors bearing down on them, the homeowners would not be able to obtain similar housing and risked the loss of their considerable equity in their homes, their lawsuit said.

Most of the residents are elderly, and some have lived in the condo's two- and three-bedroom units for more than 30 years.

"In the most expensive housing market in Florida history, defendants are illegally forcing the homeowners to sell their homes to Piper Ventures and seek to pay the homeowners just a fraction of their homes' true value," the lawsuit said.

But Piper Ventures and the other investors stood their ground.

In court filings, they said the Florida law differed from Sandpiper Village condo documents dating to 1977. These documents allowed a condo termination if 75% of owners approved it, which meant Piper Ventures would have the upper hand.

Florida law, on the other hand, doesn't allow termination of a condominium if 5% of those voting reject the plan.

The investors also said they weren't bound by Florida law because the law's language wasn't sprinkled throughout the condo's 1977 documents. Instead, language was only referenced in two places in the documents, their court filings said.

As for that $65,000 offer, Piper Ventures and other defendants said in court documents that the price was based on appraisals obtained at the time.

They said any disputes should be handled in arbitration and not the courts, and they asked a judge to toss the lawsuit filed against them.

Follow the law, a Palm Beach County Circuit Court judge says

Piper Ventures and its investors did not get their wish.

In September, Palm Beach County Circuit Court Judge Richard Oftedal rejected most of Piper Ventures' arguments and refused to dismiss the lawsuit.

In his order, Oftedal wrote that Sandpiper Village's condo documents stated they could be amended "from time to time" in accordance with the state's condo laws, a conclusion upheld by other courts.

Oftedal's order said any condo termination must abide by Florida laws that safeguard the rights of all unit owners. This includes paying condo owners fair market value for their properties, which if the property is homesteaded, must also be 100% of the original purchase price.

Florida law, Oftedal wrote, "seeks to protect minority condominium owners from the out-sized influence of bulk-owners’ termination plans."

Piper Ventures has appealed the judge's decision, said Michael Boutzoukas, an attorney representing Piper Ventures in the lawsuit. He declined further comment about the case.

Piper Ventures also wants to block other aspects of the case from going forward while it awaits a decision on the appeal, court records show.

This includes allegations by the five condo owners that Piper Ventures is improperly using common space, in this case the clubhouse, for an apartment leasing office. It also includes allegations that Piper Ventures is wrongly charging the condo board and thus, all the owners, the legal fees to terminate the condo.

Sign of the times as more investors seek property in Florida

The Holland & Knight lawyers said the Sandpiper matter is a sign of the times as older properties along the coast attract investors wishing to get a toehold in the state's sizzling real estate market.

In this case, the investor group rents its Sandpiper Village condos out as apartments.

But if the condo is terminated and the investors control all the units, investors could also choose to re-sell the units, rebuild or expand the site, the lawyers said.

Sandpiper Village condo might still be terminated by Piper Ventures, but it's also likely that the independent owners would be a large enough bloc to stop the move if the vote follows the 5% state law, Zimmerman said.

Regardless, "hopefully if (Piper Ventures) tries to do it again, it would be a fair process," Zimmerman said.

Alexandra Clough is a business writer and columnist at The Palm Beach Post. You can reach her at aclough@pbpost.com. Twitter: @acloughpbp. Help support our journalism. Subscribe today.

This article originally appeared on Palm Beach Post: West Palm Beach condo owners win case against real estate bulk buyers