In Arizona, you can be forced to sell your condo
Photo by GmanViz | Flickr/CC BY-NC-ND 2.0
Jie Cao and Haining Xia fell in love with the United States and, upon moving stateside from China in the 80s, they decided to settle down in a place with wide open blue skies that epitomized the freedom of the American way.
“I was so impressed with this land,” Cao, who got her law degree from NYU after growing up in China, said. “I don’t want to go to the east coast or west coast. I want to go somewhere open with the blue sky.”
The couple eventually made their way to Arizona, where they settled down with their family in 2011 and eventually bought a condo for their son, who was gearing up to start at the Barrett Honor College at Arizona State University in Tempe. By all accounts, they were living the American dream.
GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
But that dream turned into a nightmare when a San Diego-based company began buying units in the condo complex. Eventually the company, Pathfinder Partners, bought 90 of the 96 units.
In 2019, that gave Pathfinder Partners the ability to trigger a little-known provision in state law allowing them to orchestrate the sale of the entire condo complex. Even though the owners of the six remaining units — including Cao and Xia — all voted against the sale, Pathfinder Partners owned more than 80% of the units, guaranteeing the sale would proceed.
Cao and Xia, drawing on their combined experience as attorneys, tried to fight back, but the law wasn’t on their side. Every Arizonan who buys a condo is informed of the Arizona Condominium Termination law, though it is rarely invoked.
“(Cao and Xia) called me, and this was the first time I had heard about it. And the more I looked into it, the more outraged I became,” Eric M. Fraser, a local attorney now representing the couple, told the Arizona Mirror.
As Cao and Xia fought back, they found themselves facing more and more obstacles, getting ever more frustrated. It culminated in Cao getting arrested when the new owners trespassed her from the property.
“This is a country ruled by law, that is why I studied law in the first place, but this gave me some disillusionment,” Cao said.
The couple are hoping to convince the courts to overturn the termination law as unconstitutional. As they do so, state legislators are considering a change to the law aimed at stopping what happened to Cao and Xia from happening to other condo owners.
“It was shocking to me that this was a thing and allowed,” said Rep. Jeff Wenninger, the Chandler Republican pushing the change to state law. “It is just really shady stuff.”
From owner to arrest
Cao and Xia were looking for a place within walking distance from ASU for their son when they found the condo that was eventually taken by Pathfinder Partners. The condo, now a luxury apartment in the complex known as “The Fleetwood” which boasts 2-bedroom apartments starting at $2,210 a month.
“My son has to scramble to find a place,” Cao said. “I think he is more disillusioned than us.”
The couple had owned the condo outright when Pathfinder Partners, a private equity real estate investment firm, began buying up units in the complex.
They were using a strategy that has left other condo owners facing the unwanted sale of their property. An ABC15 report in 2018 found a similar story of a woman who was not notified when her condo was sold under similar circumstances. Last May, a 91-year-old woman in Phoenix was forced to sell her condo using the same state law, ABC15 reported.
Since 2010, Pathfinder Partners has purchased over 1,300 units that value at approximately over $122 million, according to press releases and other information.
As Cao and Xia refused to leave the condo while they looked for ways to fight the forced sale, they found themselves locked out of the condo, with thousands of dollars worth of belongings inside in the possession of the new owners and seemingly no real legal recourse. Angry and discouraged, they continued to pursue every legal avenue, including suing the company for what they saw as a “hostile takeover” of the property.
They asked police to put a lock on the property so neither they nor Pathfinder could enter until the civil battle was determined, but Tempe Police did not get involved and the Maricopa County Sheriff’s Office stated it was not their jurisdiction. Meetings between the new Fleetwood front office and the couple would become contentious, and files about the sale of the property they asked for were never provided.
It all led up to a confrontation in which Fleetwood management asked Tempe Police to trespass Cao and Xia from the property.
In the lobby of the Fleetwood, Cao tried to show a police officer the property records, utility bills and other records that showed the condo still in her name but management had already shown him deed for the condo. That deed was part of the forced sale allowed under Arizona law.
“In our view, this transaction was never proper,” their attorney Fraser said.
The couple’s lawsuit was dismissed by a trial court judge, but they are appealing it. Their plight has attracted support from the Pacific Legal Foundation, a libertarian public interest law firm, which has filed an amicus brief backing Cao and Xia.
“I think plenty of people who had this happen to them would fight this if they had the resources,” Fraser said, adding that they fully anticipate taking it to the Arizona Supreme Court.
Pathfinder Partners didn’t respond to a request for comment for this story.
But another avenue is taking aim at the condo buying issue.
The Florida connection
At about 1:22 a.m. on June 24, 2021, the residents of Surfside were awoken by the partial collapse of Champlain Towers South that resulted in the deaths of 98 people.
“These communities need continuous reinvestment,” Doug Fisher, managing principal at real estate investment firm Rockwell Property, told the House Commerce Committee in a Feb. 1 hearing about condominiums, evoking the tragedy of Champlain Towers.
Fisher told the committee that what led to the collapse in Florida was condominiums that went uncared for, and that companies like his that purchase and rehabilitate condos help prevent that sort of deterioration from happening.
And if House Bill 2275, Weninger’s bill to require 100% support for terminating a condo association and selling the property, that couldn’t happen, Fisher said.
Rockwell Property is the company that bought Citi on Camelback, where the 91-year-old woman who was forced to sell due to a buyout had lived.
Weninger said that he has tried to work with stakeholders to fix the problems with the law in order to make it more fair for all involved, but hasn’t found much success.
The bill would make it so 100% of the association would have to agree to terminate the condominium association instead of 80%. Weninger said he attempted to add additional items into the bill such as making it so these sort of deals can only be done in matters of health and safety or making the vote have to go to a governing body, but the parties that represent groups like Rockwell and Pathfinder Partners “didn’t like that,” so he didn’t include those provisions.
“They’re concerned about parachuting in from Chicago and making money off the backs of Arizonans as much as they can,” Weninger said. “People are shocked that this exists in Arizona, and people who own condos don’t know it.”
The bill has won bipartisan support in the House and Weninger said he is building a “coalition” in the Senate. But the bill hasn’t yet been scheduled for consideration by the full Senate, though Weninger said he has been in conversations with Senate President Karen Fann to get the bill moving.
In the Senate Commerce Committee hearing on the bill, Sen. J.D. Mesnard, R-Chandler, said he foresees the bill being the subject of litigation if it were to pass. Weninger told the Mirror that attorneys in the state House of Representatives said the bill was constitutional, though lobbyists representing real estate investment firms refuted that claim.
“I have a hard time with this idea that something that someone doesn’t understand can be used against them to remove them from their home,” Mesnard said in Senate Commerce, adding that he has family members who live in a condo who were unaware of the 80% law.
In Florida, a nearly $1 billion settlement was agreed upon for the families, survivors and victims of the Champlain Tower South collapse, which happened because of a series of missteps by people within the community, government and engineers who built the initial site.
Weninger, who is running for state treasurer, said this bill would be a capstone to his time in the legislature: It protects the essence of the American way.
“Life, liberty and the pursuit of happiness. To me, that also includes personal property,” Weninger said.
Xia and Cao are gearing up for their day. And while they’re happy with what Weninger is doing, they’d rather see the law repealed entirely. Cao said people who don’t have the legal expertise or the money she and Xao do, and so can’t fight for their property.
Xao said it’s too big a problem to ignore.
“This is a matter of statewide importance,” he said.
SUPPORT NEWS YOU TRUST.
Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.