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Phillips Esq.
Phillips Esq., Attorney-at-Law
Category: Real Estate Law
Satisfied Customers: 13130
Experience:  B.A.; M.B.A.; J.D.
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I am in contract to buy a condo unit in a new condo conversion.

Resolved Question:

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? Would I then get 17% of the rent of the other units? 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.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Phillips Esq. replied 1 year ago.
Thank you for giving me the opportunity to assist you. Kindly use CONTINUE or REPLY button to ask for clarification or follow-up questions.


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.


http://codes.lp.findlaw.com/nycode/RPP/9-B/339-t



“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

article.”




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.

Customer: replied 1 year ago.
Thanks for your response. So, to be clear, I could force the sponsor to have to sell the entire building to a third party if they do a termination of condominium?
Expert:  Phillips Esq. replied 1 year ago.

Thanks for your response. So, to be clear, I could force the sponsor to have to sell the entire building to a third party if they do a termination of condominium?


Response: Not exactly. Once the owner withdraws the condo from the jurisdiction of the Condominium Act, the condo owners would be treated as Tenants in Common and partition action would be filed by you to force the owner to buy you out if the owner refuses to cooperate with you. If the owner is not in a position to buy you out, the property would be sold to able and willing buyer and you would get your percentage share of the sale proceeds after deduction of liens on your unit.

Phillips Esq., Attorney-at-Law
Category: Real Estate Law
Satisfied Customers: 13130
Experience: B.A.; M.B.A.; J.D.
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