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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Real Property - Transactions

Date & Time
  • event Date

    Thursday, October 20, 2022

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

The CLE webinar will address the deconversion of condominium units into multifamily rental units and the risks and benefits of this process. The panel will discuss the issues for developers and condominium ownership, the legal process, and the liability of condo board members who conduct a deconversion.

Faculty

Kelly C. Elmore
Principal; Chair of the Deconversion Department
Kovitz Shifrin Nesbit

Ms. Elmore advises condominium, homeowner, and townhome community associations on all aspects of corporate law including: association contracts, amendments to declarations and by-laws, rule enforcement, the special assessment process, board elections, assessment collection, foreclosures and bankruptcy issues, developer turnover, construction defect disputes, and contract review. She is Chair of the firm’s Deconversion Department and advises condominium associations on the complex process of condominium deconversion (or “Section 15 sale”).  In this process, a buyer or developer purchases a condominium property and converts the property into apartment rentals. Considered by many in the industry to be the leading authority in the deconversion process, Ms. Elmore is a regular guest speaker and panelist for various industry lectures, seminars and panel discussions.  

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Kathryn Kovitz Arnold
Partner; Chair Real Estate Practice Group
Taft Stettinius & Hollister LLP

Ms. Arnold is the Real Estate Practice Group Chair and also heads the firm’s Condominium Practice Group which handles all aspects of condominium law, including development, conversion, de-conversion, and working with homeowner’s associations. For over 30 years, through her wide-ranging real estate practice, Ms. Arnold has played a key role in shaping the landscape of many of Chicago’s most diverse neighborhoods and business communities. She focuses in the areas of real estate development, commercial and residential condominium development and conversion, leasing, mixed-use projects and high-rise development, restaurants, vertical subdivisions and separations, and commercial financing (lender and borrower representation). A focus of her practice has been condominium de-conversions. Ms. Arnold has served as lead counsel for the buyer on some of Chicago areas largest condominium de-conversions.

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Description

In the current real estate market, condominium deconversion offers developers and unit owners lucrative opportunities. Restrictions or prohibitions on leasing condominium units made it difficult for a non-occupying owner to generate income to pay the unit's ownership costs until the unit could be sold.

The low supply of new construction and large numbers of potential home buyers shut out of the housing market because of damaged credit or large student loans have created increased need. However, converting condominium buildings into rental properties can be more time-consuming and labor-intensive than acquiring an existing apartment building.

While investors can profit from a conversion, especially in developments where most units have failed to sell, owners who wish to stay can be at a loss. The legal process for deconversion is typically a combination of state law and the condominium's CC&Rs.

In Chicago, several large downtown properties that failed to sell have undergone deconversion into apartments, aided in part by Illinois state law that allows a condominium board to sell all units once 75 percent of owners agree to a sale.

A condo board contemplating such a sale should consider the issues when hold-out owners bring suit to stop the process. Boards act as fiduciaries for all owners and must avoid self-dealing, lack of full disclosure or candor or conspiratorial conduct with the deconverter, and act with good faith and loyalty to all condo owners.

Listen as our authoritative panel discusses deconversion of condominiums, the pros and cons for developers and owners, and how a board attempting this process must act to avoid liability.

Outline

  1. Deconversion of condominiums to apartments
    1. Developer issues
    2. Owner issues
      1. Hold-outs
    3. Legal process
      1. Chicago examples
    4. Condominium board liabilities
    5. Other best practices and considerations

Benefits

The panel will address these and other key topics:

  • When should a condominium association consider a deconversion offer?
  • What can hold-out owners do to prevent a deconversion?
  • What liabilities does a condo board face when attempting a deconversion to apartments?