I am considering buying a unit from a sponsor who converted a commercial building into a condominium two years ago but decided to sell only two of six units at the time and has rented the other four residential units. He now plans to sell the first of the remaining four and will likely sell the balnce over an unidentified time period. Questions: 1. Does the transfer tax normally paid by a seller... [more]
I am considering buying a unit from a sponsor who converted a commercial building into a condominium two years ago but decided to sell only two of six units at the time and has rented the other four residential units. He now plans to sell the first of the remaining four and will likely sell the balnce over an unidentified time period.
Questions:
1. Does the transfer tax normally paid by a seller in a sponsor transaction still fall on the seller's shoulders given the buyer is not the first person to reside in the unit? In other words, why does the buyer pay the TT in a sponsor deal, traditionally, whereas the seller pays them in a non-sponsor deal.
2. When a sponsor starts selling off units one-by-one, what are the risks involved with being one of the first purchasers given the sponsor will retain absolute control of the condominium, its Board of Managers and have the ability to amend the By-Laws without any vote of new owners?
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Response by realestatejunkie
over 18 years ago
Posts: 259
Member since: Oct 2006
All of your questions should be answered in the offering plan which you should have a real estate lawyer review.
No hard and fast rule depends on the offering plan.
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Response by huh
over 18 years ago
Posts: 47
Member since: Nov 2007
You don't see tons of them, but some folks look for coop sponsor units to avoid a board turn down issue. We looked at one over the weekend but thought the pricing was including a bit too much for that "condo like" feature.
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Response by wavedeva
over 18 years ago
Posts: 209
Member since: Jan 2006
Two concerns:
Bank financing may be difficult to obtain if a building is not majority owner-occupied. Even if you obtain financing, when you want to sell your apartment, the next purchaser may have problems if the building is not majority owner-occupied.
Any time one group holds a voting majority block, there can be problems. The first condo that I bought had problems with mold growing in the walls (which of course was hidden by freshly painted walls when I saw the unit). All the units in my line had this problem, but most of them were owned by a family trust that was renting the units. They had no desire to fix the problem because they did not want to spend the money! They just scrapped and repainted or covered up the problem with wood trim whenever their tenants complained. Renters have more flexibility than owners. If something is wrong with an apartment, they can move relatively quickly. Owners are at the mercy of the real estate market. Make sure the sponsor's selling price takes his majority voting power into consideration! Also make sure you get the unit AND the building examined by a certified inspector (do not rely on an inspector recommended by the sponsor).
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Response by masterq
over 18 years ago
Posts: 110
Member since: Jan 2007
God advice from wavedeva. Though I THINK the banks' requirement that a building be majority owner occupied applies only to Co-ops. I don't think they bother check thst out for Condos.
All of your questions should be answered in the offering plan which you should have a real estate lawyer review.
No hard and fast rule depends on the offering plan.
You don't see tons of them, but some folks look for coop sponsor units to avoid a board turn down issue. We looked at one over the weekend but thought the pricing was including a bit too much for that "condo like" feature.
Two concerns:
Bank financing may be difficult to obtain if a building is not majority owner-occupied. Even if you obtain financing, when you want to sell your apartment, the next purchaser may have problems if the building is not majority owner-occupied.
Any time one group holds a voting majority block, there can be problems. The first condo that I bought had problems with mold growing in the walls (which of course was hidden by freshly painted walls when I saw the unit). All the units in my line had this problem, but most of them were owned by a family trust that was renting the units. They had no desire to fix the problem because they did not want to spend the money! They just scrapped and repainted or covered up the problem with wood trim whenever their tenants complained. Renters have more flexibility than owners. If something is wrong with an apartment, they can move relatively quickly. Owners are at the mercy of the real estate market. Make sure the sponsor's selling price takes his majority voting power into consideration! Also make sure you get the unit AND the building examined by a certified inspector (do not rely on an inspector recommended by the sponsor).
God advice from wavedeva. Though I THINK the banks' requirement that a building be majority owner occupied applies only to Co-ops. I don't think they bother check thst out for Condos.