Terminating a Condominium: Navigating the Process, Redevelopment Considerations, Benefits and Pitfalls
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Real Property - Transactions
- event Date
Thursday, March 20, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will provide real estate practitioners with an overview of the complex process and benefits and pitfalls of terminating a condominium. The panel will also examine redevelopment considerations and best practices for real estate counsel when advising real estate developers and condominium associations.
Mr. Rivera’s practice focuses on real property and corporate law, representing numerous developers, investment companies, business owners, municipalities, lenders, retailers and management companies throughout the United States and Latin America. Since 1981, he has handled a broad range of matters involving the development and financing of various classes of commercial real estate including retail, office, industrial, multifamily and mixed-use properties. Mr. Rivera’s expertise lies in acquisition and sales, leasing, contract/lease enforcement and evictions, loan transactions, foreclosures and workouts.
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.
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.
Many aging condominiums nationwide will require significant repair and renovation soon and will reach the end of their useful life. This is especially true in extreme coastal areas. The best alternative may be termination, sale, and redevelopment. The problem is exacerbated by deferred reserve funding and construction cost inflation. Termination presents a profitable opportunity for redevelopment. Termination is typically governed by state law and the recorded condominium declaration. There are over 20 states that follow either the Uniform Condominium Act or the Uniform Common Interest Ownership Act.
Under the Uniform Acts, terminating a residential condominium requires approval by at least 80 percent of the unit owners (more if required by the condominium declaration). State laws vary greatly--anywhere from 67 percent to 100 percent approval. The condominium association may seek a sale to a developer or, in rare cases, participate in the redevelopment in various ways. Termination is often the best exit strategy with costly repairs looming and inadequate reserves. Some developers purchase enough units to unilaterally vote to terminate unless regulated by state consumer protection laws. The termination agreement is also based on state law requirements, but most states and the Uniform Acts allow great flexibility on the terms of the sale. The unit owners must approve the sale and the termination agreement.
The distribution of sale proceeds can be complex due to many issues, including size, location and condition of the units, mortgage liens, property and transfer taxes, and any delinquent assessments. Developers who purchase units to terminate must meet fair price and independent appraisal requirements. Unit owners in some states can dispute the appraisal which may delay the process. Also, working with a title company is important to ensure that the association can convey a clean title. Transferring possession upon the sale, with or without existing leases, must be carefully planned.
Listen as our authoritative panel provides real estate counsel with an analysis of a condominium termination and its benefits and challenges. The panel will also offer best practices and recommendations for commercial real estate development projects amid the trend of more condominium terminations in the future.
- Overview of a condominium termination
- Termination approval
- Termination agreement
- Sale and distribution of proceeds
- Benefits and pitfalls
- Redevelopment issues
- Best practices
The panel will discuss these and other important issues:
- What are the key considerations for terminating a condominium?
- What are the benefits and pitfalls involved in terminating a condominium?
- What are some best practices for navigating the practical and legal issues when advising real estate developers and condominium associations?
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