Two renters in Sarasota’s Park View condo complex have gotten a rude surprise over the past few weeks.
They discovered their landlord — Michael Kell of Canton, Ohio — does not have firm title to the units he has been renting them since September.
Kell bought the units from the Park View Condo Association, which had foreclosed on the former owners because they had not paid their association dues. And Kell made the purchases knowing that the bank that provided loans for the former owners would some day foreclose and take possession of the units.
But Kell did not say anything about a pending foreclosure to the tenants. So when they received foreclosure papers in the mail, both Theresa Royal and Lucia Reid freaked out.
“This guy came came to my door in April and said my unit was in foreclosure and I was the unknown tenant and he needed to serve me,” Royal said. “I tried to call Michael and say: ‘Hey what’s up.’ He always returned my previous calls, but it took weeks to get a hold of him this time.”
Royal responded by withholding her May rent check and demanded that Kell prove he was the owner. Kell wasted no time in filing an eviction notes. In June, a Sheriff’s deputy showed up at Royal’s door and told her she needed to move within 24 hours.
“I have no family here,” Royal said. “I was hysterical. I asked that he just give me my money back, but he wouldn’t do that.”
Kell did not return two calls from the Herald-Tribune.
An attorney representing the Park View Condominium Association said it is not uncommon for condo associations, which are owed condo dues, to take title to units through foreclosure. Some of those associations then rent them to cover their overhead expenses and a few sell their temporary title to private investors like Kell for a few thousand dollars and the private landlords rent them out until the the banks that are owed money foreclose on former owners.
“Everyone is taking a chance,” said Kevin Edwards, an attorney with Becker & Poliakoff in Sarasota whose firm represents Park View. “But it usually takes a long time for the bank to complete the foreclosures.”
The problem according to Reid, the other Park View tenant who received a foreclosure notice in the mail, is that Kell never notified them that their lives could be disrupted.
“If he had approached me and explained the situation, I would have nothing to complain about,” Reid said. “My goal was to stay here and buy something down the road. But I can’t live here with the uncertainty.”
Reid added that Kell initially said he would cover her utilities and cable bill. In fact, that’s what she says her lease says. But Reid said Kell came by shortly after she moved in and told her the utilities and cable were no longer included.
“There is a law that requires the owner to disclose a mortgage delinquentcy to a tenant,” said. Dan Lobeck, a well-known Sarasota attorney who specializes in condo law. “The owner has to put the tenant on notice that there is a default.”
Lobeck added that whatever a landlord says in a lease with regard to utilities and cable payments prevails over any message that landlord may deliver orally.
Lobeck also noted that he generally advises condo associations that foreclose on units to rent them out themselves.
Court records show that Kell has owned a condo in Park View since the height of the real estate boom. He paid $179,900 for a unit in September 2005 and bought another unit at 1350 Main for $481,800 in April 2007.
Thanks to the downturn, those units are now worth less than what Kell paid. But instead of selling at a loss, Kell has doubled down.
He bought a second unit at 1350 Main for $200,000 in January 2009 and a second unit at Park View for $52,900 in July 2010. He then resold the Park View unit at a $3,600 profit four months later.
In March 2011, he bought a third Park View unit for $38,000 and a fourth in May of that year for $47,000.
In between those two deals, he took title of a unit that had been foreclosed on by the Park View Condominium Association by paying that association $3,400.
He picked up another unit in the same way in August and has been renting one of those apartments to Royal for $850 per month and the other to Reid for $750 per month.
Both tenants also paid him security deposits and last month rent when they moved in.
“He’s been raking it in ever since,” Reid said.
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