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I am in contract to buy a condo unit in a new condo conversion. Mine will be the first unit sold, and represents 17% of the common interests. The sponsor will retain the other units for the foreseeable future. Is there a risk that the sponsor could declare a termination of condominium and then I would lose my condo and become a tenant in their building?
Response 1: Yes, and No. The owner can terminate the condo association pursuant to New York Property Code Article 9-B Section 339-T because he has at least 80% of the common interest. However, that would not make you a Tenant. You would still be the owner of your unit, but would have to sue the owner for partition of the building with 17% of the sale proceeds going to you. Put another way, the owner must buy you out.
“If withdrawal of
the property from this article is authorized by at least eighty per cent
in number and in common interest of the units, or by at least such
larger percentage either in number or in common interest, or in both
number and common interest, as may be specified in the by-laws, then the
property shall be subject to an action for partition by any unit owner
or lienor as if owned in common, in which event the net proceeds of sale
shall be divided among all the unit owners in proportion to their
respective common interests, provided, however, that no payment shall be
made to a unit owner until there has first been paid off out of his
share of such net proceeds all liens on his unit. Such withdrawal of
the property from this article shall not bar its subsequent submission
to the provisions of this article in accordance with the terms of this
Would I then get 17% of the rent of the other units?
Response 2: You would get 17% from the sale proceeds. The owner would buy you out. That's what partition means.
How does that work? This is not as unrealistic as it sounds because the sponsor appears to have changed their mind and would rather not do a condo conversion, but for having signed a contract with me already.
Response 3: See my previous responses.