Jenny Tower recently abolished its governing association, allotting control of property management to an outside trustee.

South Florida condo owners are increasingly experiencing grizzly scenarios dubbed “plans of termination,” where many individual property rights are being stripped away and units converted into rental complexes.

This comes as a highly challenging situation to condo owners. Investment groups holding a supermajority in a building association’s voting power can cancel individual property ownership rights and in exchange convert the entire project into a rental complex controlled by a non-owner or designated trustee.

The goal in enacting a “plan of termination” is to allow bulk buyers an attempt at consolidating control of a project and reducing expenses in hopes of bolstering returns.

The 16-story Jenny Tower condominium, located just west of Greater Downtown Miami, is a preeminent example of the effects a termination plan can have on individual unit owners.

Last August, Somerset Tower Apartments LLC, voted to terminate Jenny Tower’s governing association. Somerset had been a bulk buyer in the Tower’s property — owning about 90 percent of the property’s units. Somerset supported a “plan of termination” that transferred all ownership rights in the building to a trustee with complete control and “sole discretion” in the project’s operation.

Individual unit owners under the plan were converted into “beneficiaries,” and entitled to a stake in the rental project. A designated trustee then obtained an independent appraisal of the “fair market value” of all the property’s units.

In 2008, individual buyers had purchased units in Jenny Tower at an average of $345 per square-foot, according to Miami-Dade County Records. The termination plan and subsequent reappraisal assessed the unit’s value to average at $91 per square-foot, a 74 percent decrease from the original average purchase price made three years prior, according to the Miami-Dade County Property Appraiser’s Office.

The termination plan allowed Somerset the first option to purchase the entire complex at the appraised value, regardless of whether or not the individual owners wished to sell.

According to the Miami-Dade County recorded plan, the termination anticipates that lenders who provided loans to individual unit owners in Jenny Tower, “will receive less than the amounts necessary to satisfy their mortgage liens.” Moreover, the plan gives the designated trustee authorization to proceed, “as it sees fit, without requiring the consent of any unit’s owners/beneficiaries or lienors, inasmuch as the plan confers the trustee the authority to protect, conserve, manage, sell or dispose of the condominium property.”

Not only are individual unit owners stripped of their rights but also face new challenges in covering their mortgage and lender fees.

In the past three years, at least 51 condominium associations have been “terminated” in South Florida’s tricounty region, according to government records. The longer it takes for the South Florida residential real estate market to stabilize, the greater the likelihood and expectation that bulk buyers will consider “plans of termination” as a potential reorganization strategy for condominium projects.