Taking over an entire HOA

It seems relatively easy -- provided you have the money, of course -- to take over an HOA. All you need to do is buy up enough properties to the point where the risk factor becomes too unappealing to lenders. Then, once sellers realize they're unable to sell their property, you offer to buy at a far lower price. Unless they get lucky with a cash buyer or a very inexperienced lender or they decide to sublet the unit, they'll have no other choice but to sell. This will obviously drive future sale values down, but what do you care? In fact, you want that to happen to make for easier pickings. Eventually, even the inexperienced lenders won't be dumb enough to go near the place. Meanwhile, you're snatching up properties left and right and feeling pretty damn good about it.

At this stage in your takeover, you're profiting rather nicely as you own and sublet half the association's properties. Additionally, you basically control what business gets done because now you have one vote per property you own. Then residents start jumping ship before the resale values of their units plummet to unfathomable lows. You, on the other hand, grin from ear to ear because this, of course, is nothing but good news for you. Eventually, everyone has moved away and the entire association has basically turned into a giant apartment complex. You are now the entire board of directors and can do whatever you want. All you have to do is propose new business, cast all your votes in favor of it, and it's done. However, I can't help but think that meetings would be somewhat lonely.

Is this dystopian setting actually plausible? Are there any laws out there that give associations the power to determine whether or not someone can sublet their unit?

Ron,

What you describe has been done a number of times. Once a party gets sufficient votes he can amend the declaration to require all other owners to sell their units to him at a ridiculously low price. As condo owners are not generally known for their vast wealth, the remaining owners are not likely going to be able to mount a serious legal challenge.

Given the normal apathy of owners, even owning just a few units would allow a person to control the board. Under his control, the board could amend bylaws and rules to favor that person. Any enforcement actions would also be in his favor and the board could exercise its discretion in refusing to pursue enforcement against him.

As far as I know, any restrictions or prohibitions regarding renting units is found in the declaration and not in the law. If the board is under the control of an investor the rules against renting are not likely to be enforced.

In the situations that I have read about in the past, the objective was to convert a condo to either an apartment or a hotel. I cannot recall ever reading of someone buying a controlling interest in a condo building and then putting the units back on the market as condos.

? What would Hammurabi say ?