[BROKERDIRT] Converting Condos to Apartments
Mike Christoff
I represent a bank that took back an 8 unit condo project from a developer a couple years ago. None of the units were ever sold. The bank owns the entire project. The bank would like to convert the condos to apartments because they think it will be easier to sell to an investor that way. From my review of the statute, it appears that all the bank needs to do is to file a deed waiving the condo regime and merging the records of the filial estate with the principal property. Does anyone have a form for such a deed that they would be willing to share? Thanks.
Michael O. Christoff
Mark B. Miesse & Associates, P.C.
Memphis Title Company
7518 Enterprise Avenue
Germantown, Tennessee 38138
Phone: (901) 759-3900
Fax: (901) 751-1135
Email: mi...@memphistitleco.com
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Paul Hogan
Sent from my iPad
I represent a bank that took back an 8 unit condo project from a developer a couple years ago. None of the units were ever sold. The bank owns the entire project. The bank would like to convert the condos to apartments because they think it will be easier to sell to an investor that way. From my review of the statute, it appears that all the bank needs to do is to file a deed waiving the condo regime and merging the records of the filial estate with the principal property. Does anyone have a form for such a deed that they would be willing to share? Thanks.
Michael O. Christoff
Mark B. Miesse & Associates, P.C.
Memphis Title Company
7518 Enterprise Avenue
Germantown, Tennessee 38138
Phone: (901) 759-3900
Fax: (901) 751-1135
Email: mi...@memphistitleco.com
NOTE: This e-mail may contain PRIVILEGED and CONFIDENTIAL information and is intended only for the use of the specific individual(s) to which it is addressed and may be subject to attorney-client privilege, and/or attorney work product privilege. These privileges are not waived by this transmission. If you are not an intended recipient of this e-mail, you are hereby notified that any unauthorized use, dissemination or copying of this e-mail or the information contained in it or attached to it is strictly prohibited. If you have received this e-mail in error, please delete it (and any copies) and immediately notify the person named above by reply e-mail. Thank you.
Due to anticipated compliance requirements from the CFPB, Memphis Title Company will be transitioning to an encryption process. Email sent with confidential information will be encrypted such that you will need a password. You will receive an email message providing necessary information enabling you to retrieve and open the encrypted material. We appreciate your positive or negative feedback as to this system. Thank you for your patience and cooperation.
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Keith Collins
In Illinois, if the lender has fee title to all units, it could by unanimous act of ownership of all units dissolve the condominium and revert title to simple fee simple title of the whole. Best practice would include unanimous consent waiver of meeting notice, adoption by unit owners of a corporate unanimous consent resolution, board minutes, and recording of an conveyance-type instrument to memorialize and effectuate the condominium dissolution, referencing and attaching exhibits. I haven’t done that or seen it done, so I cannot provide forms. You should check steps and content in advance with a good title insurer in your jurisdiction to make sure they will insure the “de-condo’d” post-dissolution ownership of the whole property in fee simple. Because condo statutes and governance are determined by applicable state law, the required percentage of ownership, procedure, instrument and terminology may vary.
S. Keith Collins, Attorney at Law
1033 Skokie Boulevard - Suite 250
Northbrook, IL 60062 Office 847/831-2178 Fax 847/831-1478
Most of my business comes from introductions to people who could use my help, so please don't keep me a secret.
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From: BROKERDIRT - Real Estate Brokers Discussion Group [mailto:BROKE...@LISTSERV.UMKC.EDU] On Behalf Of Mike Christoff
Sent: Friday, May 23, 2014 10:03 AM
To: BROKE...@LISTSERV.UMKC.EDU
Subject: [BROKERDIRT] Converting Condos to Apartments
I represent a bank that took back an 8 unit condo project from a developer a couple years ago. None of the units were ever sold. The bank owns the entire project. The bank would like to convert the condos to apartments because they think it will be easier to sell to an investor that way. From my review of the statute, it appears that all the bank needs to do is to file a deed waiving the condo regime and merging the records of the filial estate with the principal property. Does anyone have a form for such a deed that they would be willing to share? Thanks.
Michael O. Christoff
Mark B. Miesse & Associates, P.C.
Memphis Title Company
7518 Enterprise Avenue
Germantown, Tennessee 38138
Phone: (901) 759-3900
Fax: (901) 751-1135
Email: mi...@memphistitleco.com
NOTE: This e-mail may contain PRIVILEGED and CONFIDENTIAL information and is intended only for the use of the specific individual(s) to which it is addressed and may be subject to attorney-client privilege, and/or attorney work product privilege. These privileges are not waived by this transmission. If you are not an intended recipient of this e-mail, you are hereby notified that any unauthorized use, dissemination or copying of this e-mail or the information contained in it or attached to it is strictly prohibited. If you have received this e-mail in error, please delete it (and any copies) and immediately notify the person named above by reply e-mail. Thank you.
Due to anticipated compliance requirements from the CFPB, Memphis Title Company will be transitioning to an encryption process. Email sent with confidential information will be encrypted such that you will need a password. You will receive an email message providing necessary information enabling you to retrieve and open the encrypted material. We appreciate your positive or negative feedback as to this system. Thank you for your patience and cooperation.
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Scott Gates
With the expense and difficulty of condo conversions, and the oft changing requirements to do so – in my opinion it would decrease the value and salability by eliminating the condo regime. The ability to later sell as individual condo units would IMO enhance the value to an investor.
Scott Gates
Sent from my iPad
I represent a bank that took back an 8 unit condo project from a developer a couple years ago. None of the units were ever sold. The bank owns the entire project. The bank would like to convert the condos to apartments because they think it will be easier to sell to an investor that way. From my review of the statute, it appears that all the bank needs to do is to file a deed waiving the condo regime and merging the records of the filial estate with the principal property. Does anyone have a form for such a deed that they would be willing to share? Thanks.
Michael O. Christoff
Mark B. Miesse & Associates, P.C.
Memphis Title Company
7518 Enterprise Avenue
Germantown, Tennessee 38138
Phone: (901) 759-3900
Fax: (901) 751-1135
Email: mi...@memphistitleco.com
NOTE: This e-mail may contain PRIVILEGED and CONFIDENTIAL information and is intended only for the use of the specific individual(s) to which it is addressed and may be subject to attorney-client privilege, and/or attorney work product privilege. These privileges are not waived by this transmission. If you are not an intended recipient of this e-mail, you are hereby notified that any unauthorized use, dissemination or copying of this e-mail or the information contained in it or attached to it is strictly prohibited. If you have received this e-mail in error, please delete it (and any copies) and immediately notify the person named above by reply e-mail. Thank you.
Due to anticipated compliance requirements from the CFPB, Memphis Title Company will be transitioning to an encryption process. Email sent with confidential information will be encrypted such that you will need a password. You will receive an email message providing necessary information enabling you to retrieve and open the encrypted material. We appreciate your positive or negative feedback as to this system. Thank you for your patience and cooperation.
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Keith Collins
Paul Hogan’s comment is valid, unless condos will be a disadvantage in other ways. In Illinois, I have seen a townhome building condo conversion result in much higher real estate tax assessments and expense, even where the units were never individually sold.
S. Keith Collins, Attorney at Law
1033 Skokie Boulevard - Suite 250
Northbrook, IL 60062 Office 847/831-2178 Fax 847/831-1478
Most of my business comes from introductions to people who could use my help, so please don't keep me a secret.
LEGAL NOTICES:
1. CONFIDENTIALITY - This transmission may be: (1) subject to the Attorney-Client Privilege, (2) an attorney work product, or (3) strictly confidential. If you are not the intended recipient of this message, you may not disclose, print, copy or disseminate this information. If you have received this in error, please reply and notify the sender (only) and delete the message. Unauthorized interception of this email is a violation of federal law.
2. TAX ADVICE - The U.S. Treasury requires all tax advisors to provide extensive disclosures when providing communications regarding tax law. In order to comply with our obligations, please know that this document does not contain all of the required disclosures; therefore, you may not rely on any tax advice contained in this document to avoid tax penalties.
From: BROKERDIRT - Real Estate Brokers Discussion Group [mailto:BROKE...@LISTSERV.UMKC.EDU] On Behalf Of Paul Hogan
Sent: Friday, May 23, 2014 8:51 PM
To: BROKE...@LISTSERV.UMKC.EDU
Subject: Re: [BROKERDIRT] Converting Condos to Apartments
Is there some obstacle to keeping their status as condo's but run them as if they were apartments? That has worked well for my clients over the years.
Paul Hogan
Sunnyvale CA
Sent from my iPad
On May 23, 2014, at 8:03 AM, Mike Christoff <mi...@MEMPHISTITLECO.COM> wrote:
I represent a bank that took back an 8 unit condo project from a developer a couple years ago. None of the units were ever sold. The bank owns the entire project. The bank would like to convert the condos to apartments because they think it will be easier to sell to an investor that way. From my review of the statute, it appears that all the bank needs to do is to file a deed waiving the condo regime and merging the records of the filial estate with the principal property. Does anyone have a form for such a deed that they would be willing to share? Thanks.
Michael O. Christoff
Mark B. Miesse & Associates, P.C.
Memphis Title Company
7518 Enterprise Avenue
Germantown, Tennessee 38138
Phone: (901) 759-3900
Fax: (901) 751-1135
Email: mi...@memphistitleco.com
NOTE: This e-mail may contain PRIVILEGED and CONFIDENTIAL information and is intended only for the use of the specific individual(s) to which it is addressed and may be subject to attorney-client privilege, and/or attorney work product privilege. These privileges are not waived by this transmission. If you are not an intended recipient of this e-mail, you are hereby notified that any unauthorized use, dissemination or copying of this e-mail or the information contained in it or attached to it is strictly prohibited. If you have received this e-mail in error, please delete it (and any copies) and immediately notify the person named above by reply e-mail. Thank you.
Due to anticipated compliance requirements from the CFPB, Memphis Title Company will be transitioning to an encryption process. Email sent with confidential information will be encrypted such that you will need a password. You will receive an email message providing necessary information enabling you to retrieve and open the encrypted material. We appreciate your positive or negative feedback as to this system. Thank you for your patience and cooperation.
To add or remove from this mailing list, please go to <http://listserv.umkc.edu/scripts/wa.exe?SUBED1=BROKERDIRT&A=1> or send an email message to the address list...@listserv.umkc.edu, with the text SIGNOFF BROKERDIRT in the body of the message.
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SMA
In Florida, those increased assessments may be based upon comparable units sold at other addresses and those other sales then are used by government appraisers. Where I have appealed such projects, because we had continuous rent being collected AND because our assessment standards are supposed to be based upon “unencumbered fee simple” – we’ve argued that the condo documents were encumbrances and were not indicators of value unless there were substantial sales of units at the subject. And then we supported our position with a pro forma income analysis based upon market rents and expenses. That argument was successful with some magistrates but not with others – depended upon the venue. You really have to know the governing laws, rules, and the nuances in the specific jurisdiction and also what the overall market is like during the assessment period.
Sheila M. Anderson, Principal/Realtor / Commercial Property Services, Inc., Licensed Real Estate Broker / 305-372-9200 / 352-245-7441
Profile: http://www.floridapropertytaxappeals.com/cps-president-broker.htm
www.floridapropertytaxappeals.com / www.commercialpropertyservices.co
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Bill King
I agree with Scott, there may be merit in keeping the condo regime in place. Virtually all condos can be operated as apartments (under one ownership), but not all apartments can be treated as condos.
There may be a value lift and a marketability advantage to keeping the condo regime in place depending on where it is; condo conversions are starting to reappear in a few large markets, most notably in Manhattan. If the project is located in a community with a declining population, the condo status may be of less value.
As Keith Collins noted, there may be other expenses that make the project more expensive, both to hold and to transfer. In addition to taxes and association issues, a bulk transfer in this case might require eight deeds, eight recordings, etc.
I think it gets down to the market in which the property is competing for buyers and whether potential re-sale in the future as individual units would attract buyers today at a high enough price to offset any additional expenses. A good market analysis by a local broker or appraiser would help answer that question.
Bill King
William King & Associates, Inc.
P.O. Box 24422
Federal Way, WA 98093
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