I got a call this week from The Sun Sentinel. They asked if I had heard about the prominent developer who approached the owners of the other Champlain Towers buildings that are still standing, offering to buy out all of their units. I had not, but I’m not surprised in the least about it. In fact, it’s going to be happening more and more. Developers are going to be approaching lots of owners in condominiums that are distressed.
Why approach the owners in the remaining Champlain Towers condominiums? I’m sure the developer is thinking that these owners may now have a hard time selling their condo units on the open market because there may not be many buyers interested in purchasing a unit in a condominium by that name. The Champlain Towers will forever be remembered as the building that collapsed and where nearly a hundred innocent people died. I think the developer is right. It will be tough to sell your units in the remaining Champlain Towers condominiums.
The truth is……if that’s the case…and it is next to impossible to now sell your condo unit in these buildings, the developer can look like a knight in shining armor, if the price they offer is fair and reasonable. It may very well make sense for the owners to seriously consider the developer’s offer. At the remaining Champlain Towers buildings, the developer’s offer is contingent upon 95% of the owners agreeing to sell to the developer. If less than 95% of the owners agree to sell, the deal is off the table. That’s because if at least 5% of the owners vote against a plan of “termination” the developer’s plan to “terminate” the condominium, knock it down and build a more expensive one fails. So, the developer needs to acquire at least 95% to ensure their plan succeeds.
We know that it’s about to get more expensive to live in a condominium because it looks like it will become more difficult to waive reserves and buildings will be undergoing more frequent inspections. Repairs will be needed more than ever before which means money will be needed like never before. When unit owners don’t have the money or don’t want to spend the money on a building that’s already old, rest assured that developers will be there ready to make an offer to everyone so that the property can be bought, knocked down, rebuilt and sold.
Over the last few years the law has made it more difficult to terminate a condominium. As a result of the tragedy at The Champlain Towers I certainly expect the pendulum to swing back the other way. Terminations will become easier. Developers will use their eyes and airs searching for the most vulnerable properties, meaning the ones that will require the greatest cost to repair. The laws regarding termination continue to evolve, but if I am a developer I may want to be cautious about buying units in a condominium that requires 100% of the owners to agree to termination and that does not have Kaufman language or “as amended from time to time” language. In these types of condominiums, one owner who refuses to sell may wind up screwing up the developer’s grand plans.
