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The majority of the Apthorp buyers are corporate entities, not individuals. Will they count as bona fide buyers needed to make up the 15% of sold apartments in order for the conversion plan to be declared effective?
Hasn't the plan already been declared effective?
Yep AG has already approved the condo plan as effective.
also remember that corporations can count as people as long as they're "arms-length" buyers.
DG Neary Realty
Thanks, front_porch. What does "arms-length" buyer mean? Wellheythere, the conversion isn't effective until the sponsor sells 15% of the units, which is completely separate from the AG approving the black book.
I wonder - can the developer have an ecomomic interest in or relationships with shell corporations set up for such? Say the developer owns 49% of it?
Oh, I'm not a lawyer.
So let's use as an example an actual offering plan (we're going with the one for Trump World Tower b/c it's handy)
On page 54 it says the plan will be effective (I'm translating from lawyer-ese) once purchase agreements on 15% of the units are in effect. (Remember this is our hypothetical: TWT has been up and running for years).
On page 55 it says the plan won't be declared effective based on purchase agreements in a number of situations: the purchaser hasn't had time to review the plan, for example.
In that long list of situations that don't count is:
"a Purchaser who is Sponsor, the Selling Agent or the Managing Agent, or who is a principal of any of the foregoing or who is related to any of the foregoing or any principal thereof by blood, marriage or adoption or as a business, associate, employee, shareholder or limited partner..."
so that's what I mean by "arms-length" -- you can't be the sister-in-law of the developer, or, to use jason's example, a partner in a shell corporation with the developer, and have that count towards effectiveness.
There is a loophole, of course -- the plan says that you can submit documents to the AG's office arguing that sales to those related parties actually ARE bona-fide sales. But I would bet that sales at, say, discounts to market pricing wouldn't get that waiver from the AG.
DG Neary Realty
I've been following the closings to date, and the various LLCs all seem legit. You'll see LLCs as the buyer in a lot of these pricey new condos, so an LLC per se isn't a sign of collusion.
Unlike at, say, 15 CPW, the Apthorp buyers don't seem particularly concerned with concealing their identities. It's more like they're using LLCs for whatever other reasons buyers do. E.g., one family bought two apartments with two LLCs, but one brother was the signer on both of them. One of the LLCs was the same used to buy the other brother's house in Chicago many years ago.
Where is the very disgruntled formerapthorptenant to give us his input?