Bankers Held In Contempt Over Bird Grove Condo

posted on January 18th, 2011 filed under: Financial Responsibility, Properties in Focus, Real Estate News

The Daily Business Review reported last week that a Miami trial judge held six banks in contempt of court, and threatened bankers with jail, in connection with the default-besieged Bird Grove Condo at 2734 Bird Road in Coconut Grove.

Miami Real Estate Images -- Bankers Held in Contempt

The Bird Grove exemplifies one of the ways in which the financial industry has socialized the consequences of the bust after privately profiting from the boom.  Two units in the Bird Grove are bank-owned (REO or real estate owned).  Seventeen others are in default, but banks have not followed through on the foreclosure process and taken ownership.  With ownership comes responsibility for condo association dues, taxes, insurance, maintenance and all the other joys of home ownership.  And when repossessed properties are sold, banks must recognize the losses on their balance sheets.

So instead, banks leave the units in limbo, avoiding expenses and deferring loss-recognition.  When half of the unit owners aren’t paying either, the condo association is starved for dues and the building goes downhill fast.

The court appointed a receiver for the Bird Grove, who found a condo building where “garbage hadn’t been collected for weeks, electricity was about to be cut off, the building had no insurance, and an elevator was broken,” according to the DBR.

Bird Grove Condo, 2734 Bird Rd.

Bird Grove Condo, 2734 Bird Rd.

The good news for the banks is that the law is on their side.  Florida law, as interpreted by the appeals court with jurisdiction over the Miami area, simply does not require banks to pay condo dues and expenses until they take ownership.

The banks involved are Bank of America, Flagstar Bank, GMAC, PNC Bank, SunTrust Bank, U.S. Bank and Wells Fargo.  Congenial billionaire Warren Buffet, whose company is Wells Fargo’s largest shareholder, probably doesn’t have to worry about garbage collection and electricity.

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posted by // This entry was posted on Tuesday, January 18th, 2011 at 11:04 pm and is filed under Financial Responsibility, Properties in Focus, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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