Tuesday, July 17, 2012

Marc Realty Residential sues to force several Columbia Gardens condo owners to sell - Residential News - Crain's Chicago Business

Marc Realty Residential sues to force several Columbia Gardens condo owners to sell - Residential News - Crain's Chicago Business

"A venture led by Marc Realty Residential LLC is trying to compel the owners of three condos in the Columbia Gardens building to sell their units to the venture, which took over 31 units in the project at 1615-25 W. Columbia Ave. from its developer last year. The building's condo association, which is controlled by the Marc venture, has sued the holdouts, citing language in the association's governing documents and state law that allow it to force them to sell if a supermajority of owners approve the sale of the entire building. The case highlights the problem facing many distressed-property investors that try to buy failed condo projects at a discount and then rent out the unsold units. Owning a rental building with some condos mixed in can be complicated, and many investors avoid such “fractured” projects entirely. Others look for ways to buy out existing condo owners after buying a big chunk of unsold units from the project's lender or developer. Marc tried that, but the three owners wouldn't go along, according to the lawsuit, filed last week in Cook County Circuit Court. The association argues that they must sell because the owners of 81.5 percent of the building's units voted to sell all the condos last year. Under the association's rules, it has the authority to sell the entire building if two-thirds of the property's units vote to approve the transaction, according to the complaint."
Another example of forced sale in a seriously distressed condo project.  This is the statute that Marc Realty is relying on:

(765 ILCS 605/15) (from Ch. 30, par. 315)
    Sec. 15. Sale of property.
    (a) Unless a greater percentage is provided for in the declaration or bylaws, and notwithstanding the provisions of Sections 13 and 14 hereof, a majority of the unit owners where the property contains 2 units, or not less than 66 2/3% where the property contains three units, and not less than 75% where the property contains 4 or more units may, by affirmative vote at a meeting of unit owners duly called for such purpose, elect to sell the property. Such action shall be binding upon all unit owners, and it shall thereupon become the duty of every unit owner to execute and deliver such instruments and to perform all acts as in manner and form may be necessary to effect such sale, provided, however, that any unit owner who did not vote in favor of such action and who has filed written objection thereto with the manager or board of managers within 20 days after the date of the meeting at which such sale was approved shall be entitled to receive from the proceeds of such sale an amount equivalent to the value of his interest, as determined by a fair appraisal, less the amount of any unpaid assessments or charges due and owing from such unit owner. 
    (b) If there is a disagreement as to the value of the interest of a unit owner who did not vote in favor of the sale of the property, that unit owner shall have a right to designate an expert in appraisal or property valuation to represent him, in which case, the prospective purchaser of the property shall designate an expert in appraisal or property valuation to represent him, and both of these experts shall mutually designate a third expert in appraisal or property valuation. The 3 experts shall constitute a panel to determine by vote of at least 2 of the members of the panel, the value of that unit owner's interest in the property.
(Source: P.A. 86-1156.)


Anonymous said...

But I thought involuntary membership corporations like HOAs and condos "preserved value"......

Yet again another example of the equivocal nature of that statement oft-repeated by the HOA industry. You'll often hear the management companies and the HOA industry lobbyists claim that "HOAs preserve value".

The industry hacks never say "who" the value was allegedly "preserved" for. The listener is lead to believe that the beneficiary of this value preservation is the owner of the property. Yet this is wholly incorrect. The beneficiaries are the VENDORS, developers, local government, etc. - everyone BUT the owners.

Carole said...

The same thing appears to be taking place at ATL Lofts in Atlanta's Atlantic Station.

Cocke Finkelstein, Inc. bought 105 out of approx 150 units, raised the HOA fees astronomically, installed an employee as Pres of the HOA, yet denies it wants to push out the remaining owners.