Is it a bad idea to purchase a condo from a developer when there is no condo association formed yet and the?

Asked by Kristen, Chicago, IL Mon Jun 1, 2009

rest of the units are rented?

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7
John Diebel, , Chicago, IL
Wed Dec 16, 2009
Kristen,

I would not get into the scenario that you are describing. Let's say for example that the building is 50% owner occupied and 50% rental. In this situation the owner of the rental units (likely the developer), will be responsible for paying the association dues on those units. While he will likely be legally obligated to do so, the other owners (like you) will have no way of enforcing these payments. In short, what are you going to do when you find out that the developer has not been paying his share of the assessments and the association has no money?

You could try taking legal action, but that costs money (which you already don't have). Even if you did successfully sue the developer, there is little chance you would collect since most developers form a LLC (limited liability corporation), which is probably already bankrupt.

There is plenty of inventory of existing condos with good associations. Buy one of those.
1 vote
Kipp Blackbu…, , Chicago, IL
Tue Jun 2, 2009
You can't go wrong with RD659 or SoNo (Apple is building their new Mac store at North & Clybourn)!

RD659 Pricing:

One bedrooms without parking from $192,000

One bedrooms with parking starting at $224,000

One plus dens with one bath and parking from $255,000

One bedroom plus dens with 2 Baths and parking from $291,000

Two bedrooms with two baths and parking starting at just $336,000

Any unit offered with free parking can be bought for $20,000 less...
1 vote
Kale Realty, Agent, Chicago, IL
Mon Jun 1, 2009
Hello Kristen

Personally I would not purchase a property with no assocation. In addition, it will be impossible to get a loan from a bank.

My advise- unless you have cash and all the other units are occupied stay away

Best of luck
Web Reference:  http://www.kalerealty.com
1 vote
Cynthia, , Chicago, IL
Tue Jun 2, 2009
I know that you don't have a crystal ball Kipp, but do you think that the SoNo could be gearing up for a fire sale too?
0 votes
Cynthia, , Chicago, IL
Tue Jun 2, 2009
What about the rd659 "clearance sale" going on right now. They are brand spankin' new and the lender is falling over themselves to get me to buy one. Good idea? How about the SoNo in Near North Side/Lincoln Park?
0 votes
Scott Newman, Agent, Chicago, IL
Mon Jun 1, 2009
I think Nick is exactly right but I'd also like to add one thing. If there is all renters in the property, there cannot be any association because there are no owners to pay dues. If he offers to finance you himself I'd be leary unless it's the deal of the year and you know you will be cash flow positive if you put a tenant in the unit. Either way- be very cautious and get your attorney involved immediately.

Scott Newman
Newman Realty
0 votes
Kipp Blackbu…, , Chicago, IL
Mon Jun 1, 2009
Depends on how good of a deal it is! Situations like this are all about the calculated risk. You need a good attorney and real estate broker. Cash purchase? Without an HOA you can't get a loan. Make sure the building can be insured...
0 votes
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