As condos turn into rentals, owner feels pressure to sell
A: From what I have been hearing on the street — and seeing in several emails from my readers — this apparently is becoming a real problem. Developers, and even some property owners, are offering condo owners prices that are (or may be) slightly higher than market value, with the idea that the elderly unit owner will leap at the chance to sell the unit.
Why is this happening? Often the value of the condo units is far less than if the complex can be torn down and a new condo can be established with fancy amenities, penthouse units, et cetera.
Or, perhaps in your case, the board treasurer’s father is getting a good deal buying foreclosed units and believes the rental market is a good investment.
Let’s say a developer ends up owning a large majority of the units. Typically, a condominium can be terminated if there is a favorable vote by the unit owners. Each state’s law is different; in the District of Columbia and in Maryland, it requires a vote of 80 percent of all owners. A unanimous vote may be required in other states.
It is not easy to terminate a condominium, even if the requisite vote takes place. Most unit owners have mortgages (deeds of trust). They have to be paid off, in full. And contracts have to be terminated or transferred to the new entity.
What is that new entity? It becomes a single rental apartment and every unit owner then becomes a tenant-in-common owner. This may be great for an investor, but what about for you?
It is true you will be able to stay in the apartment, but at what price? The new owners can set the rent, and it is doubtful you will be able to contest it. As you wrote, it is not in your best interest to sell, but it is also not in your best interest to stay where you are.
You should immediately determine what your state law requires for termination. If it is 100 percent, then it will not happen. But if it is only 80 percent, try to mount a campaign to persuade other owners not to vote to terminate.
Bottom line: If you are qualified, you might want to consider a reverse mortgage that will provide you with a monthly income for the rest of your life.