Would-be condo renters feel boxed in

After Shawni Mozaffari bought her $459,000 condominium at the Buckhead Grand in July 2004, she lauded the building’s service in a newspaper article.

“It’s wonderful to live in a community where so many things are taken care of for you,” she said, explaining the staff even bought her a shower curtain rod.

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Joey Ivansco/jivansco@ajc.com

Shawni Mozaffari is worried she will lose her Buckhead Grand condo if the condo association does not allow her to rent it out.

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Five years later, Mozaffari is still talking about the Buckhead Grand, but now she’s mad. “This is not a home anymore,” she said, showing a visitor the expansive view of northside Atlanta from her 33rd-floor unit.

Blame the recession. Atlanta has a glut of condos and few are selling, so owners want to rent them but cannot because of limits designed to protect condo values.

“A lot of these buildings have three- to four-year waiting lists” of prospective landlords, said Steve Cooper, a Midtown condo resident and co-founder of Cooper Brown Real Estate, which manages residential property.

After trying to sell her condo, Mozaffari leased it and was fined $25 a day by the condo association for exceeding the 25 percent rental cap. Then the tenant left after the building’s staff prevented his business associates from entering the unit. Without a renter, Mozaffari said, she might lose the condo to foreclosure. She already has lost a lake home to foreclosure.

“Where is the empathy, the compassion?” she asked. “They prefer to go by laws and regulations of a document printed five years ago.”

Mozaffari sought an exemption to the limit but was not approved. Such requests pose a dilemma for condo associations. Allowing waivers will help homeowners weather the recession and might curb foreclosures. But lenders and mortgage buyers, such as Fannie Mae and Freddie Mac, worry too many rentals will hurt a community’s stability.

“Can you imagine the impact on condominium unit values within a complex if the only potential buyers were cash buyers?” asked Jed Morton, the attorney who manages the Web site www.georgiacondolaw.com.

“You’re going to lose sales if you have a lot of foreclosures and you’re going to lose sales if you have a lot of rentals,” said Blondie Peoples, community association manager at City Heights in Atlanta’s Old Fourth Ward neighborhood. “A lot of boards are running into this.” Like the Buckhead Grand, City Heights has a 25 percent rental cap and a backlog of landlord applicants.

“While communities don’t like rentals, they like foreclosures even less,” Atlanta real estate attorney Seth Weissman said. “A relatively small percentage of foreclosures in a community can have devastating effects on property values.”

But Cory Tibbs, president of the Plantation at Lenox Homeowners Association, said a high percentage of renters can cause long-lasting damage, more so than foreclosures.

“If you become more lenient, all of a sudden your property becomes 30 to 40 percent occupied by renters,” Tibbs said. “You can’t control who the owners rent to. The renters don’t go away.”

Foreclosures are prevalent in Atlanta. Scheduled foreclosure sales for April are expected to set a record, the research firm Equity Depot said last week. One in eight Georgians is in foreclosure or behind on a mortgage, according to the Mortgage Bankers Association. Average condo sales the past two years are down 58 percent compared to earlier periods, Haddow & Co. reported.

Mozaffari lives in her second condo, at the Meridian Buckhead next to the Buckhead Grand, because it’s less expensive.

The condominium association declined to comment about Mozaffari’s situation, citing homeowner confidentiality. The community’s documents explain the rental cap is needed to assure a high number of owner occupants and to help future buyers secure loans.

“That’s the kiss of death for the project as a whole,” Weissman said. “I feel very sorry for this lady, but at the same time I would feel really sorry for the condo project if no buyer could get mortgage financing.”

An immigrant from Iran who became a U.S. citizen 11 years ago, Mozaffari owns Art Imaage, which provides businesses with original artwork she buys overseas. To keep the 16-year-old business alive, she said she cut five jobs, cashed in her life insurance and trimmed her pay to almost nothing.

“I have learned the rules of the economy but they have changed,” Mozaffari said. “Even the U.S. government is bending the rules these days. I don’t ask for a bailout. Let me solve my problem my way.

“I found the solution — with my tenant.”