With the demand for apartments in Chicago rising, many real estate developers have discovered a previously untapped supply of potential acquisition targets: residential condominium buildings, including older condo properties typically plagued by large deferred maintenance obligations and stagnating or declining unit sales prices. While the process for converting condominium buildings into rental properties can be more time-consuming and labor-intensive than acquiring an existing apartment building, patient investors often see hidden value opportunities and are able to capitalize on the spread between a building’s higher value as a rental property versus its lower value as an owner-occupied condo building.
Much Shelist’s real estate attorneys have been involved in the deconversion phenomenon from the start. As the trend continues, we are leading the way in developing best legal practices with respect to representing real estate developers in the bulk purchase of units and converting these condo properties into rental apartment buildings.
Our attorneys have represented real estate investors in successfully closing condominium deconversion acquisitions involving buildings containing as few as seven units and as many as 296. We also recently represented a purchaser in its due diligence on a potential 505-unit deconversion in a suburb northwest of Chicago. Additionally, we have represented various lenders making loans to borrowers in connection with the acquisition of 100 percent of the units in deconversion projects.
Beyond representing investors in these bulk condominium unit purchases, many of our real estate attorneys have spent much of their careers working with condominium buildings. They call on their related experience in hundreds of condominium development projects to offer valuable insight on condominium deconversions.
Our highly experienced and well-organized team is uniquely qualified to represent purchasers in complex deconversion transactions, including:
- Assisting in the preparation of concise, deal-appropriate letters of intent
- Helping clients prepare and present offers to condominium associations
- Attending the initial meeting with a condominium association, helping our clients answer unit owners’ questions about the process and helping showcase our clients’ experience
- Advising on all applicable condominium laws and ordinances governing a transaction, including compliance with Section 15 of the Illinois Condominium Property Act
- Handling issues as they arise with specific unit owners and their attorneys, including valuation issues, title issues and leasing concerns
- Reviewing an association’s Condominium Declaration up front to ascertain whether it contains provisions that could create obstacles later
- Preparing comprehensive purchase and sale agreements, which we continually modify in order to avoid issues encountered in previous transactions
- Preparing all ancillary sale and transfer documents, including individual affidavits for each unit owner
- Identifying title issues relating to individual condominium units early in the process and working to resolve those issues well in advance of the scheduled closing date
- Advising our clients with respect to association obligations and protecting our clients from successor liability claims
- Preparing and recording the necessary documents to abrogate a Condominium Declaration