Condo Conversion Question
My wife and I are thinking of putting an offer on an apartment that is part of a whole building condo conversion, but the agent said that the condo closings are planned for January. How reliable are things like this and what does the process look like? We sign a contract and put a down…
My wife and I are thinking of putting an offer on an apartment that is part of a whole building condo conversion, but the agent said that the condo closings are planned for January.
How reliable are things like this and what does the process look like? We sign a contract and put a down payment in now and wait until next year to move in? Is this normal? What if, while we are waiting for next year, we find something better OR what if the whole thing doesn’t work out or something? What are your thoughts on this whole thing in general?
The price and location seem pretty good.
Many thanks.
Yours,
Noodlemania
Babs: Thanks again for your insight! The building has some 20 or so units in it and they are converting the whole building saving a some for rentals. I will have to get the offering plan and look into this a little more. We decided to hit a couple of open houses on our own to see how it goes without a broker. So far, confused but ok. 🙂
Lula: these are in Prospect Heights / Crown Heights…
Thanks!
Noodlemania
Those apartments, I believe, specify that you must be an all-cash buyer, due to the fact that it is being converted to condominiums one unit at a time and is majority rentals.
Hi Noodles–The building doesn’t happen to be on Clinton Street in CG, does it? Have seen some listings for (small) 2-beds in a building there that’s being converted. Was possibly going to take a look at one…
Good luck!
I second what Babs says, except that if this is a non-eviction conversion (ie. if it is currently a rental building and the tenants in place have the right to remain in place) the sponsor only needs to have 15% of the units spoken for to begin closings.
The offering plan holds the answers to this and more! spend the time to read it yourself, as well as have your attorney review.
This is standard practice for new construction/conversion, but the timetable is notoriously unreliable. Unless one or more banks have already pre-approved the building, and you’re obtaining financing through them, closings generally cannot start until at least 50% of the units are in contract.
How many units are in the building? What % are currently in contract? If this a townhouse conversion with four units or fewer you will have a tough time getting financing regardless — you should definitely run this by your mortgage broker before proceeding.
And, yes, once you’ve signed the contract and put that money down you’re pretty much stuck, even if there are delays in closing, unless there is a subtantial amendment to the offering plan that would allow you to get out and get your deposit back. A careful review of the offering plan will let you know what your eventual options are. Once you get a copy of the offering plan you should have your lawyer review it.
But I thought you were working with a real estate broker. That person should be able to provide complete answers to all your questions on this — he or she is probably familiar with the building and may know the answers to some of your questions already.
Good luck!