Re: Restrictions on selling property - Posted by Frank Chin
Posted by Frank Chin on April 18, 2004 at 08:25:19:
John:
Not a lawyer, but I lived in a condo, and owned a few as rentals.
All condo’s, and coops as well, have CC&R’s where you have to abide by. The restrictions are put in place for the good of ALL the condo owners, usually to maintain the value of the condos, prevent speculation, improve living conditions, and preserve stability.
In the case of a new builidng, the develop sets the bylaws. In fact, I bought a unit at a newly renovated building from the sponsor/developer, (building was formerly a high school) who is the one that develops the bylaws prior to the sale of the first unit. When a certain number of units are sold, power is handed over to an elected HOA, which can then modify the bylaws. But this might not help you if the restrictions themselves are written into the deed.
But the HOA cannot impose its will on the sponsor, and he can still set his own rules for sale of the original sponsor units.
The complex where I got the condos impose restrictions on rentals. I looked into investing in condos and coops thru the years, and most lawyers tell me the CC&R’s are pretty ironclad, and if you cannot abide by them, don’t buy into it.
Coops in NYC has a “flip tax” where which makes it unprofitable to buy a unit, and sell within a year and make a profit. The purpose is to prevent speculation where an investor buys the unit, and quickly flips it.
I understand there’s been challenges to these rules, at least in NY, mostly unsucessful. The only grounds appear to be where one proves discrimation.
I finally understood the value of the restrictions. While the value of the condos at our complex varied from 50K to 100K, a investor friendly complex not far away which had little restrictions at the beginning had units selling for 8K with no takers.
Frank Chin