New Construction Condo - LARGE common charge underestimate
Hi All. We are one year into purchasing in a new condo at the moment. The current maintenance as per the offering plan has been in effect for a year. We are now transferring the board to owners and the new budget is jumping over 60%. On the budget for next year we are getting…
Hi All. We are one year into purchasing in a new condo at the moment. The current maintenance as per the offering plan has been in effect for a year. We are now transferring the board to owners and the new budget is jumping over 60%. On the budget for next year we are getting over $35k in “contribution” from the sponsor. This cash infusion limits our common charge increase to 15% for the next year. There is no guarantee that he will ever contribute again. This money is not related to any maintenance that is due from the sponsor or anything, it is totally separate.
When I asked the sponsor and their attorney at the first meeting, they said it was out of the goodness of their heart. Am I being cynical or is there a reason (legal or otherwise) that the sponsor is capping the common charge increase to 15%?
Thanks all.
Seems fishy.
The offering plan requires the developer to provide a best estimate budget. If the actual operating budget shows that the estimate was completely unrealistic, the case could be made that the estimate was intentionally misleading, suggesting fraud.
The Board, facing a deficit, might be relieved to see an influx of cash, and agree to take the money. But long-term, you’re selling yourself and all the other owners short. (By ensuring that Owners don’t see more than a 15% increase this year, the developer gets time to disengage and disappear from the scene).
You may have recourse now, but never again have an opportunity to go after the developer. Beware of signing anything.
You should definitely contact a lawyer with experience in these matters to have a look at this from all angles.
Speak with Tony of Crossown Management, he is familiar with similar situations, and can assist in getting your building on target with a limited budget, Crosstown is a Management Company with over 20 Years experience. they currently manage a portfolio with over 200 Million in Egress. Tony Can be reached at (917) 405-8100, I can be reached at (917) 573-3304 – AL Rosario
All 30+ residential units are sold. Only the commercial space on the first floor is left. I would doubt that matters so much in regard to commercial.
I would assume it’s a business decision – sponsor believes that a 60% bump would depress selling prices for the units he owns. Sponsor figures to more than make up for the contribution in sales over the next year being able to market condos with a more affordable common charge.
Just some additional info – Last year, there was a budget gap of over 50K, this gap was filled by the sponsor. This year, in order to fill the gap, our common charges would go up by around 60%. So this coming year, the sponsor is contributing around $35k to the budget to fill some of the gap. The remainder of the gap will be filled with an 15% common charge increase.