Most people in Chicago have watched our skyline grow over the past few years. With the initial promise of high-end, high-rise condos we have instead seen a boom in high-end, high-rise rentals.
Last week a friend asked me what happens if one buys a condo in a new building and due to too many unsold units the developer goes into foreclosure? What becomes of the owners in the building?
As Terri and I are not lawyers, we cannot advise anyone on what to do in such a situation. One should seek counsel from a real estate attorney.
I have, however, researched the topic over the past week, mostly through conversation, and have found out what has happened or could happen in some cases. Each case is unique so, as a lawyer friend said to me, a larger real estate firm would be the best to seek counsel from.
In many cases the developers sell the building to an apartment company before any condo units closed. The building then becomes 100% rental. Sometimes after the market shifts these buildings revert back to condo and the units are sold individually.
Both Frankfort IL and New York City have shown creative efforts to turn failed projects into something good for the city. Frankfort is converting one project into senior housing, while New York is creating affordable housing for moderate- and middle-income citizens.
Lighthouse Pointe condo development Frankfort, IL
The question remains, what if some condos were already purchased, so only the units still owned by the developer are going into foreclosure? The unsold units are often sold as a package to an investor who then rents them out until the market shifts and the units can be sold individually. In some cases the developer may make lucrative offers to the owners of the other condos in the building in an effort to own 100% of the complex.
The more complicated question for owners who do not plan to move becomes what happens with the common areas, assessments, reserves, and the association if a rental company owns multiple units in the building? These are among the questions you should ask your real estate attorney should you find yourself in this situation as a variety of factors can have an effect on the situation.
With the economy at a point unlike anything we have seen in eighty years the best we can do to navigate these seemingly uncharted waters is consult with our professional contacts who have dedicated themselves to helping us all move forward.
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If you have legal questions regarding this subject or other topics in real estate law please consult a real estate attorney such as Brad Miller.
|Bradford Miller | Attorney at Law | Bradford Miller Law, P.C.
134 N. LaSalle, Suite 2250, Chicago, IL 60602
Main: 312-238-9298 | Fax: 312-379-3163