Through the 1990s and up until the market crash in 2007, the development of condominiums was all the rage. In addition to new condo construction, many old apartment buildings were purchased and converted. But in the past couple of years, demand for rentals has increased. And, as many pre-crash condominiums continue to lag behind pre-crash values, the pendulum is swinging heavily the other way – towards the purchase of condominium projects in bulk for purposes of converting them back to rental apartment buildings. Handled correctly, these transactions can benefit both the purchasing investors and the selling unit owners.
Bringing a successful deconversion from condominiums to apartments to closing involves a number of intricate steps and proper planning, beginning with an investor’s initial due diligence, and the presentation of a basic offer sheet to the Condominium Association Board. The Board must then take steps to engage the proper group of professionals to evaluate the merits of the offer, and determine whether the Board sees value in pursuing the sale option further.
If the Board determines that the matter is worth pursuing, or if enough owners properly petition for placing it before the ownership, the Board must present the facts and proposals to the ownership for a vote. Under Illinois law, seventy-five percent of ownership in a condominium project must vote in favor of the sale in order for it to proceed. Once that seventy-five percent approval threshold has been achieved, the sale can be consummated, even over the objections of dissenting owners. Awkward as it may be, it is essential to know how to handle those dissenting owners, as they continue to have rights and obligations until the sale has been completed.
The experienced professionals at Erwin Law can help you understand the complexities of a deconversion. If you are interested in discussing a current or future project, either as an investor or as a Condominium Association, you can count on our Team to guide you through the multi-faceted process. For more information visit http://erwinlawfirm.com or call us at (773) 525-0153.