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Saturday, May 17, 2008


On April 22nd I wrote about a bank foreclosure on Whistling Duck at the Key West Golf Club that I called a buying opportunity. READ WHAT I SAID THEN HERE. I showed the property to a client a few days later. I apologized to her for even showing the property. And my reasoning follows below.

We had looked at another listing a few days earlier of a smaller unit that was in good shape but priced comparably. I could see from the photos that the Whistling Duck property used to be very attractive when it was occupied. I reasoned that some tlc would bring back the lustre of yore and that my client could get the property for about half the price the previous owner paid for it. So more square feet and a similar price seemed rational. Wrong.

The specific
Whistling Duck property is termite infested. Many of the windows and some doors are rotted from water and termite (and/or carpenter ant) infestation. (I use that term interchangeably.) That may seem par for a neglected property in Old Town, but the town homes at the Golf Club are only a little more than 12 1/2 years old. Since the property is a town home, the adjoining property owners have to agree to have the units tented as a preventive to termite infestation. It looks like it did not happen on this specific Whistling Duck property. And because there are other properties in foreclosure that I began to wonder how many others are facing a similar fate. The units were constructed of the same materials. The windows and doors at the specific Whistling Duck unit had not been properly maintained.

This past January a real estate broker, who manages several units at the Golf Course, told me that she has had a problem with rats in some units she manages. She mentioned one specific unit that had a rat problem where the tenants had a baby. That is not good.

The Key West Golf Club Homeowners Association approved an application for a $250,000 Line of Credit with BB&T Bank at the March 17, 2008 meeting. According to Karen Hendrick of the Key West Golf Club Homeowners Association the line of credit "is for emergency use only such as a hurricane not to cover unpaid dues".CLICK HERE. The association did make a one-time special assessment of $400 per unit to cover short fall.There are many properties in foreclosure or that are bank owned. (According to on May 22, 2008 there are 13 pre-foreclosures, one set for auction, and 3 bank owned units at the golf course.) The banks are most likely not going to pay the homeowner association assessments immediately. (I used to manage foreclose properties for banks in Colorado. We only paid what we legally had to pay. No money was paid gratuitously.) That means someone else is going to have to do it. Guess who!

A lot of other condo or homeowner associations are facing similar hard times in Key West and across the country. There is a reason prospective buyers are given a copy of the association rules and access to the minutes and financial records: to determine if there are any legal or other issues that could end up causing a new homeowner to have to pay more money in the future to correct some shoddy construction, latent defects, disclosed problems that have not been repaired, undisclosed problems, or to pay the shortfall of unpaid condo assessments. It is a growing problem and buyers need to be aware of it.

I know of a four unit property in Old Town where two of the units are in foreclosure. The association is supposed to provide building insurance including windstorm. The defaulting owners stopped paying homeowners monthly fees months ago. There are no reserves to purchase the required insurance. The foreclosing banks are not going to ante up. The two surviving owners can't pay the fees on their own. What do you think is going to happen?

My concern goes way beyond the Golf Club because it is only symptomatic of what is going on at other homeowner associations both big and small.I found a very well written blog regarding this mess CLICK HERE. He cites statistics to what I said. And the statistics are scarry. "More than 60% of the nearly 500 survey respondents said that banks and
mortgage lenders now holding title to the foreclosed units or homes are not
meeting their legal obligation to pay regular fees or other assessments to
the association. More than 40% reported mortgage-foreclosed units or homes
in their communities have been vacant for more than six months, with one in
five citing vacancies of more than one year. Respondents expressed concern
about maintenance and security issues related to vacant units as the 2008
tropical storm season approaches."

Banks are notorious about nickle and dimming customers over the smallest service issues. But banks are equally notorious about pinching pennies and refusing to pay costs to maintain foreclosed properties. I'm not talking about any one bank, I'm including almost everyone in my indictment. Banks expect Realtors to pay to have electric service turned on and maintained and to have pools maintained and other services to protect the bank's assets. The banks agree to reimburse the Realtor-listing agent when the property sells. If a Realtor has 30 bank foreclosure properties for sale in Key West, imagine how much money it would take to maintain the bank's assets each month.

Again I apologize to my client that actually looked at the specific Whistling Duck unit and to anyone who read my blog and thought about looking at it. If you are looking at purchasing a condo or town home anywhere in Key West, you might want to have your attorney or accountant review the condo docs and financial statements to make sure that you are not buying into a huge mess.


Gary Thomas said...

Karen Hendrick of The Key West Golf Course Homeowners Association expressed concern on May 22, 2008 about the contents in my blog regarding the property on Whistling Duck. I edited the blog to make sure that my comments referenced the specific unit that I had originally suggested was a good buy but that after I showed it I felt I had mislead potential buyers.

Ms. Hendrick sent me this response to my edit:

"I disagree with your statement about materials and workmanship and found that to be the most damaging item you had in your blog. I can go to most of the homes on Whistling Duck and find no termites and no carpenter ants and windows that open and close that were the original windows. There is required maintenance, if you get wood rot you must address it or expect termites and carpenter ants. If you don’t pressure wash or paint the house when needed, we suggest every 6 years, then you will have moisture get into the windows and destroy them. There is no problem with the materials or workmanship at Key West Golf Club there is only a problem with owners who do not maintain their home either intentionally or unintentionally because they are not accustomed to having a home in a tropical setting."

Anonymous said...

I'm not surprised.
The Golf Course condos are cheaply made - with walls seperating them too thin. I think if you get a running start in the living room, you can make it into your neighbors living room.
Made with soft pine, I'd expect those things to be eaten alive by termites. This isn't such a unique thing - but getting your neighbors to agree to tenting is an annoying (and likely harmful) hindrence.
Great blog by the way!!


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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.