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Another Legal Question...

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Sno.
Posts: 12155 - Karma: 6,152

I live in a condo complex that is located on some pretty valuable land. Because of this, many owners in the complex believe that someday we will be bought out by an investor. Based on where we live this is not a matter of if, it is a matter of when--so the thought of us receiving an offer from an investor is nothing new.

We recently got this new sick-rick property manager (about a month ago) straight "off the boat" from Chicago. He is a licensed real estate agent as well.

This property manager came to a board meeting last night and told us that he had a meeting yesterday morning with an investor regarding an offer on our property. I asked who the investor was and he said he "wasn't at liberty to say."  He then went on about how this investor was "bigger than Kemper Freeman," and that the offer was at a "premium price."  He told us that this investor wanted to give us 500-700k up front with the intent to buy our property in 18-24 months, and that the upfront funds could help us over that time with some issues that we're having (water intrusion, etc.).  The property manager then spent the next 30 minutes basically trying to convince us that because our building is dated and our problems are insurmountable and that we should pretty much go with the offer. He even convinced the rest of the board members to approve a formal appraisal of the property. He stated details about the investors plans as well (apartments with retail).

So my question is-- is this how offers on commercial property are supposed to go down? If an investor contacted our property manager with interest in meeting to discuss an offer, shouldn't he have passed this information onto the association before meeting with them. In addition, shouldn't we have had the option of who met with them (ie: lawyer, real estate agent, etc.)-- and does he even have the right to negotiate with an investor on our behalf without or permission and then pick-and-choose what information he discloses to us?

It sounds to me like he is a real estate agent trying to get us to sell for the sake of commission. Or that the investors may have even offered him an incentive to convince us to sell.

How are offers on condominium complexes as a whole handled?

We have no idea what this manager disclosed to the investor either. For instance-- details about any water intrusion problems we may have, etc.  But we do know (or at least I do) that he is an idiot, as he was spouting off wrong information about our zoning and the amount of votes it would take to sell. He thought we could build 25 floors, and that we only needed 51% of people to consent to sale. Its actually 5.5 floors, and we need 100%.

Sep 18 2013 12:54PM
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SFB
Posts: 8895 - Karma: 26,352
i dont think ns is the best source for legal advice.
Sep 18 2013 1:29PM
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SamtheEagle
Posts: 1658 - Karma: 713
pee in the investors butt
Sep 18 2013 1:35PM
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Jane6
Posts: 5359 - Karma: 4,506
.
Sep 18 2013 1:36PM
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yelsel
Posts: 12967 - Karma: 3,451
Wait....do you own any of the property you live on or just rent a condo?
Sep 18 2013 1:54PM
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Byron_tha_gr8
Posts: 4573 - Karma: 14,299
if hes going to board meetings i'm assuming he's an owner.
Sep 18 2013 2:05PM
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yelsel
Posts: 12967 - Karma: 3,451
I meant of the property itself...the land that the complex is on
Sep 18 2013 2:10PM
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Sno.
Posts: 12155 - Karma: 6,152
Yes, I own a condo, which means I am an owner of a percent of the land, too. I think I own 1.23% of the property as a whole (buildings/property/common areas, etc.) That's how condos work and its based on the size of the condo you buy.
Sep 18 2013 2:19PM
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Sno.
Posts: 12155 - Karma: 6,152
Yes, with most people, but there are a couple on here that are lawyers, I'm awaiting their response. Although any "the guy is a douche-bag" responses are welcome, too.
Sep 18 2013 2:19PM
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Byron_tha_gr8
Posts: 4573 - Karma: 14,299
that guy sounds like a carpet bagging city slicker douche bag.
Sep 18 2013 2:20PM
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Casey
Posts: 7849 - Karma: 24,323
I'd tell that property manager to fuck off, respectfully.
Sep 18 2013 6:19PM
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deleted5
Posts: 14507 - Karma: 13,507
You left out so much info that i can't give you a real 100% for sure answer. but if he holds the majority or if he can convince the rest of the board members then you're fucked. you'll be compensated then a strip mall could be made where your condo was. but there are a lot of what ifs in that statement.
Sep 18 2013 7:03PM
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Brenone
Posts: 4944 - Karma: 296
Im not a lawyer but I work in the real estate biz. I work for a developer and we build condo's.

I can tell you right now that if you own your condo no one can force you to sell it unless the govt comes in and enforces eminant domain which is highly unlikely. Each condo has its own unit deed and tax lot which is the equivalent to owning a single family home on one lot. If it was a co-op it would be a different story because you would own shares in a corporation that owns the land and you could lose a majority vote.

Who is the president of the condo board?? The "property manager" works for the board and the property manager should not be disclosing any information to a 3rd party without the consent of the board and that 3rd party should of signed some sort of NDA.

Feel free to pm me if you have additional questions.
Sep 18 2013 10:06PM
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Wulfty
Posts: 344 - Karma: 1,876
I bet the manager guy is getting a pretty big cut of the cash that he wouldnt normally get
Sep 18 2013 11:52PM
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Phil-X-
Posts: 7205 - Karma: 14,399
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get this OP
Sep 19 2013 2:00AM
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Caucasian_Asian
Posts: 2447 - Karma: 1,665
^^^This.


He says that you would be given a payment upfront for $500k, with the balance to be paid out in 24 months.  What would the remaining balance be?  How many units in your complex? 

If you do get paid a down payment, why the fuck would you spend that on fixing up the place?  You're selling and they're knocking it down.  Any water issues should be paid for by insurance or your condo fees.

Talk to his boss, let him know about everything that was said.  And start recording board meetings.  Especially when it comes to selling.  I wouldn't trust this slimeball.
Sep 19 2013 10:30AM
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Sno.
Posts: 12155 - Karma: 6,152

Basically the complex has some water intrusion issues on about a dozen of the 79 units when it rains really hard. The city has recognized that this is their fault and are working on a two year fix to solve it.

This property manager is trying to convince all the old women on the board and throughout the complex that their flooding problems are never going to end and going to put them into bankruptcy and that the city's fix will never come.  Which is obviously just a scare tactic.

Obviously this "investor" wants to just put 500k down to reserve the right to purchase the property in 18-24 months for 21 million.  They think we are so desperate to solve our flooding issues that we'll jump on the offer, so they're guising their down payment/hold on the property as a an upfront generous "fix" for our problems. In reality, like I said, they just want to be able to lock up our property for a bargain price.  It doesn't even make sense...so for the next two years they gain interest on 21 million...and in two years what will 21 million actually be worth? (I'm too lazy to look it up)...while our property values are in the process of bouncing back from the recession. It would be the worst decision ever but with a commission of 2-3% the property manager stands to make 420k-630k in commission if is able to weasel himself in as the real estate agent.

I believe this is what he is trying to do by meeting with this investor without our permission and ordering an appraisal. He thinks we all just fell off the turnip truck (granted, I'll admit, about 40/79 units did).

I'm so glad that we were built before 1990, and that means that it will take 100% of owners to consent. If it were 51% like this idiot thinks I'd be crapping my pants.

Yes-- I will definitely make sure to record the meetings. I've recorded like 10/12-- wish I would have gotten this on on tape.

Thanks for the response.

Sep 19 2013 10:40AM
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Elmo.
Posts: 4317 - Karma: 663
if i were you id figure out what your 1.23% of the take would be if you sold the land/unit. put a number down say that you need to sell at 800K cuz you want 8000 grand for everything.

but yea also get a lawyer. or something cuz it does seem mad sketchy and if you like living there then dont vote for it.
Sep 19 2013 10:47AM
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Caucasian_Asian
Posts: 2447 - Karma: 1,665
I don't know what your housing market is like, but $265k for a condo doesn't seem like much.
Sep 19 2013 2:17PM
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J.D.
Posts: 21362 - Karma: 5,142

I do not deal with condo complex sales or real property transactions in general and I'm obviously not going to be forwarding this thread to the people in our Real Estate group who do because they have actual work to do. So this isn't legal advice so much as my somewhat educated rambling.

However, my understanding is that there isn't necessarily a "way" these go down. A prospective purchaser can structure the purchase however they want. If I'm reading it right, your description sounds like they're buying a right to purchase in 21 months. Basically they're paying $X up front for the right to purchase the property in the future for $Y. There is nothing wrong with that. All it is is a bet that when their right to purchase matures in 21 months, the value of the property will be greater than $X + $Y.

Now, I have no frigging idea why you'd take that $X and pour it right back into the property you've just agreed to sell, because all you're doing is pumping up the value of property that you've already set a price for. It's like if I were to say, "Jim, I'll sell you my truck for $2000 if you'll give me $500 up front and wait a week for me to deliver it to you", Jim agreeing, and you taking the $500 and using it to replace the truck's windshield. Why would you do that? Jim's not paying you any more for it. So I may be misunderstanding what the terms of this deal are.

Meanwhile, there are no requirements on you or anyone else in this situation. You are perfectly within your rights to demand to see the terms, the agreement or whatever the hell else is written down that you'll supposedly be agreeing to and you should certainly know who you're contracting with. You then have the right to have a lawyer with real estate experience take a look at that document and consult with you as to what if any changes he or she suggests (though I would ask up front if that's likely to be fruitful since if this is a big developer it's probably a standard form contract that they're not going to willingly accept any changes to).

If you don't get these things you have the right to say "no, go to hell", taking into account whatever terms of whatever agreement and whatever legislation your condo ownership is subject to. Which you seem to know, since you have information as to how many votes it would take to sell the property (though it seems weird to me that it would take 100% since that would usually mean nothing would ever get done, but again not my area of expertise).

Sep 19 2013 3:53PM
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motionmovement
Posts: 108 - Karma: 59
I'm not a lawyer but it at comes down to what's in the contract. If they need 100% to buy it out than you don't have to worry because you can always vote no. If the property manager is working on behalf of the owners of the condo's then he is being employed by you the owner and it wouldn't make sense why he couldn't disclose something to you since you're the one paying him to represent you. However if they don't need 100% of the votes to sell than it is a much different situation. The majority holder(s) would be able to sell without your input so unless its stipulated in the contract otherwise than they wouldn't need to disclose everything to you and you basically have no power and no say in the matter.

So read your contract.


Sep 19 2013 5:49PM
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207
Posts: 8969 - Karma: 3,846
Read your contract and if you fully OWN a share in the land and the condo then NO ONE can force you out of your condo and the land you own unless its by the government who will HAVE to pay just compensation. If this property is valued at 21 million I'd say a 1.3 percent share in it would make eminent domain about 300,000 give or take.
Sep 19 2013 6:30PM
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BLADEE
Posts: 1017 - Karma: 778
smart thing to do.
Sep 19 2013 9:34PM
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Casey
Posts: 7849 - Karma: 24,323
Basically they think/are trying to get people to believe that our flooding issues are so dire that we should use the half mil to fix our complex so it is habitable in the meantime. They have nothing to lose gambling on our desperation and a lot of the old people would sell for any price because they own outright and are about to die.
Sep 19 2013 10:02PM
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AlissaBelle
Posts: 1 - Karma: 6
Look no further for a top-notch attorney for an accident in Madison, Wisconsin. The personal injury team at DeWitt Ross & Stevens has successfully litigated cases involving a variety of personal injury accidents.


Oct 4 2013 12:23PM
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Byron_tha_gr8
Posts: 4573 - Karma: 14,299
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Oct 4 2013 12:25PM
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Sno.
Posts: 12155 - Karma: 6,152
screw you, alissabelle.
Oct 4 2013 9:37PM
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