DEVELOPERS ARE ON THE PROWL – By Eric Glazer, Esq.
DEVELOPERS ARE ON THE PROWL
By Eric Glazer, Esq.
I’m already hearing stories of developers making low ball offers to owners in high rise condominium buildings, offering to buy units at bargain prices. Here’s why….. Developers knows that in building of 25 years or more on the coast or 30 years or more inland, owners are facing massive upcoming expenses.
These include but are not limited to:
- Mandatory fire sprinklers or an engineered life safety system;
- A mandatory Phase One Inspection;
- A likely Phase Two Inspection which will subsequently result in major repairs being required to the condominium property;
- A Structural Integrity Reserve Study and the full funding of reserves.
It’s going to get mighty expensive to remain living in some condominiums and developers know that many owners simply won’t be able to afford it. Their strategy is to offer you some money for your unit instead of you having to come out of your pocket tens of thousands of dollars or more.
Developers may rely on simply making an agreement to buy everyone’s unit at the same time and if even one owner decides not to sell, the deal is off.
Developers may also have a strategy where they buy enough units to “terminate” the condominium form of ownership. Under the current statute the developer may wish to accumulate only 80% of all units. If so, the developer can then file a plan of “termination.”
the plan must be approved by at least 80 percent of the total voting interests of the condominium. However, if 5 percent or more of the total voting interests of the condominium have rejected the plan of termination by negative vote or by providing written objections, the plan of termination may not proceed.
If you read the foregoing statute, clearly developers would want to purchase just in excess of 95% of all units so that nobody can stop the plan of termination. However, some of you may have language in your governing documents that would require a vote of 100% of the owners in order to terminate the condominium. The question of whether the magic number is 80%, 95% 100% or some other number depends upon whether you have “Kaufman” language or “as amended from time to time” language in your governing documents. Believe me, it gets complicated.
The bottom line is that many of you will soon be approached by developers looking for a steal. When this happens, rather than have infighting among those that live and/or own in the condominium, I urge you to seek the advice of counsel on this very complicated topic.
No doubt older buildings will be toppled by developers who will put new ones in their place. It may be very unlikely that even though you lived there for decades, you won’t be able to afford the prices in the new condominium. Ladies and gentlemen, gentrification is coming to a neighborhood near you.
Every Sunday watch and listen…Ask Questions get Answers!
