Only two business days after being proposed, the City of Chicago recently enacted the Northwest Side Housing Preservation Ordinance. Affecting parts of West Town, Humbolt Park and Logan Square, this Ordinance requires that any multi-family property owner seeking to sell their property must first offer their tenants the opportunity to purchase the property.
The Ordinance will significantly extend the timeframe faced by multi-family property owners when selling properties in these areas. First, Owners seeking to sell multi-family property will be required to notify tenants and the City of their intent to sell at least 60 days before listing the property. Then, following the execution of a sales contract, tenants are entitled to 90 days in order to match the offer within that contract. While the extended time required to consummate a sale of property may present issues for buyers and sellers, the uncertainty this Ordinance brings certainly will. Traditionally, the time period immediately following the execution of a sales contract is utilized by the buyer to conduct due diligence prior to finalizing the purchase. Now, for at least 90 days, the buyer will have to decide whether they want to expend the time and money due diligence requires while there remains a possibility that the tenants may purchase the property instead. As an added difficulty, the Ordinance expressly prohibits owners requiring tenants to provide proof that they have the financial ability to even proceed with a purchase of the property. Finally, and likely in recognition that oftentimes tenant will lack the financial wherewithal to exercise the option to purchase the property, the Ordinance clearly affirms that tenants have the right to assign their purchase option to a third party. As such, it isn’t just the tenant’s financial ability to purchase that needs to be considered.
Although we can foresee some impacts of the new Northwest Side Housing Preservation Ordinance on multi-family transactions, it remains a recent development. Costello Sury & Rooney will keep tracking this situation and provide updates. Feel free to contact our experienced attorneys with any questions about this or other multi-family property issues.
This article is being provided for informational purposes only. This article does not constitute legal advice on the part of Costello Sury & Rooney. or any of its attorneys. No association, board member or any other individual or entity should rely on this article as a basis for any action or actions. If you would like legal advice regarding any of the topics discussed in this article and/or recommended procedures for your association going forward, please contact our office.