Demystifying Condominium Deconversions
Condominium deconversions have gained significant attention in recent years, driven by the growing demand for rental units. This trend involves the process of converting multi-unit condominium buildings into rental apartment complexes. A condominium deconversion, also known as a bulk sale, happens when a supermajority of unit owners within a condominium association agree to sell their individual units to a single purchaser, typically a real estate investor. This purchaser then “deconverts” the property from individually owned condominium units into rental apartments.
In Illinois, condominium deconversions are subject to the Illinois Condominium Property Act. Sections 15 and 16 of the Act outline the requirements for selling condominium property and removing properties from the Act’s provisions. For associations with four or more units, Section 15 requires approval from owners holding at least 75% of the total ownership for the sale to proceed. In Chicago, this threshold is higher, requiring 85% approval.
A condominium deconversion offers an efficient solution for both property owners and investors. Instead of individual unit sales to different buyers on different dates, the entire property is sold in one transaction to a single buyer, often resulting in unit owners receiving a premium above the market value for their units. This collective sale appeals to investors looking to utilize the property for rental purposes and can simplify the selling process for owners.
Deconversions can also provide financial relief for condominium associations, especially when facing financial challenges such as expensive building repairs, insurance premiums, or special assessments. Selling the property collectively can serve as a viable alternative to these financial pressures, giving unit owners an opportunity to exit with a financial benefit.
At Costello Sury & Rooney, we bring extensive experience representing both buyers and sellers in condominium deconversions. We understand the nuances of the process and the legal requirements involved. Whether you are a member of a condominium board considering a potential deconversion or a purchaser interested in acquiring a property for investment, our team is well-equipped to guide you every step of the way.
We are happy to answer any questions boards or purchasers may have about the deconversion process, including compliance with local laws, negotiating terms, and navigating the financial and legal complexities. Contact us at tel:630.384.8331 or email us at admin@csrlawfirm.com to discuss your needs and learn how we can assist you in achieving your goals.
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.