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The condo association at 3252 Fremont Ave. is one of three groups suing developer Clark Gassen and other investors for not leaving adequate reserves for maintenance and repairs at completed projects.

Condo groups sue Gassen, other investors

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By Jake Weyer

Three Southwest condo associations are suing several development investors, including former condo-converter Clark Gassen, for not providing adequate reserves for maintenance and repairs at projects they completed.

The groups — 3252 Fremont Association, the Lowry Hill Park Condominium Association and the Ridgewood Condominium Association — also allege that known construction defects were not disclosed and association fees were not communicated truthfully. The associations represent more than 40 units converted from apartments to condos.

Condo development and conversion was a booming business several years ago and many developers took part in it.

"I think we're looking now at the fallout of that," said Schaefer Law Firm attorney Larry Schaefer, one of several attorneys representing the condo associations. "The fact that it was done with a lot of haste in an effort to get these condos converted and sold, and a lot of legal requirements were just overlooked in that process."

Gassen, who became a controversial figure converting hundreds of apartments to condos in Southwest, is being sued along with several former business partners and divisions of his former Uptown-based brokerage company, Financial Freedom Realty. Gassen denied the condo associations' allegations and said he and the other investors were prepared to defend themselves.

"We believe what we did was appropriate," Gassen said.

The associations are asking for more than $50,000, according to the complaint, but Schaefer said, "It's well in excess of that."

State law requires the budgets of homeowner associations to have "adequate reserve funds" to cover the replacement of parts that affect all occupants, such as boilers and roofs — two items one association president, who didn't want to be named, said need attention. That condo owner said developers did not leave her association the funding needed to make the repairs and her group has increased its dues in an attempt to get the work done.

Gassen said he stood by his work and would make repairs if necessary.

"What these homeowners need to understand is they bought used buildings and if there are any issues with construction in the units, we'll fix them," he said.

Schaefer said the buildings' older construction is exactly why reserves are needed.

"A lot of times with these older buildings there are going to be things that come up like that and that's why these reserves have to be established for condos converted and they weren't," he said.

Schaefer said he and the other attorneys involved have advised other condo associations about reserve issues and he expects more lawsuits will follow.

Reach Jake Weyer at 436-4367 or jweyer@mnpubs.com.

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Not the Buyers Fault

By Condo Buyers Just Want the Law to Be Followed, February 26, 2009

Buying a condo conversion is not like going to a garage sale (where law doesn't apply), buying a used bike tire (clearly "as-is" item) and then wondering why it doesn't hold air. Condo law in MN requires developers to hire engineers to determine the cost of repair items that will be needed in the future, and then set the monthly dues at an amount that pays for it over time. These people bought condos with the full protection of MN law, not "as-is". There is no such thing as "as-is" real estate, and Uptown isn't a garage sale. If developers didn't follow the clear MN statute, they either did so ignorantly--which is no excuse--or with the aim to flip properties to unassuming fist time buyers that may never know the difference if they followed the law or not, and then leave the associations with no money to pay for the repairs or pursue their legal rights against the developers. While developers make $$$, buildings crumble away and no one can afford repairs they never anticipated because the developers didn't do their legal due diligence to discover and tell purchasers about. You can't argue with a statute. When developers don't do their legal duty to disclose what repairs are needed, repairs arise that associations weren't aware of and can't afford. This puts Buyers at risk of eviction by their associations, foreclosure by the banks, and possibly also personal bankuptcy. Someone should tell developers that condo conversions are expensive for a reason... because following the law means lots of costly requirements. But it's even more expensive when you get caught.

Plenty of blame to go around

By Jeremy Fink, February 24, 2009

All to often condo buyers are under the mistaken impression that owning a condo is the same as renting an apartment. If you want the benefits of ownership, you must also shoulder the responsibilities- such a s maintenance.

It should also not come as a surprise that developers would cut corners and do the absolute minimun in order to maximize their profits. There is plenty of blame to go around.

I suspect we will see a serious decline in the maintenance of the converted properties in Southwest as the new condo owners discover they are now responsible for repairing the roof, fixing boilers, pest control and all the other things that the former landlords dealt with- not to mention capital reserves.

I'd like to know if the purchasers and their realtors were mislead or simply didn't do due diligence about the association they were about to become part of? Is this an example of malfeasance on the part of Gassen or simply buyers who now want to sue their way out of a bad situation they've gotten themselves into?

By t.a.m., February 23, 2009

i wonder if, when selling the condos, mr. gassen told prospective buyers, "now, you have to understand, these are older structures......." as he's now saying.