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Saturday, July 28, 2007

When you're stuck with your condo...

... it's particularly maddening that your developer is making it impossible for you to get rid of it. All you SoWhat "urban pioneers," enjoy!

Comments (5)

Everything that goes around comes around.

Here's a joke that was popular in the 1980's:

Q. What's the difference between gonorrhea and a condominium?

A: You can get rid of gonorrhea.


One interesting developer incentive mentioned in the article was "...offering a year of no condo fees on one-bedroom units -- an incentive Harris [a private seller] could not match". It would appear that this could have been done at the expense of the other unit owners in the association, who would have to deal with reduced condo asociation dues income but still be required to provide insurance and services to these unsold units - that is, unless the developer were required to kick in for the amount given away in the incentive.

It's prohibited in Oregon, per ORS 100.530:

... The declarant shall pay assessments due for operating expenses on all unsold units....From the date of conveyance of the first unit in the condominium; and...for a staged or flexible condominium, from the date of recording the applicable supplemental declaration and supplemental plat recorded pursuant to ORS 100.120.


From the date of conveyance of the first unit in the condominium, the declarant shall pay assessments due for reserves on all unsold units.

I actually have two friends who live in that Condo Complex on Mass Ave, they rent from the owner who bought it two year ago, trying to flip it. Only thing is they rent for a fraction of the mortgage payment. There's a huge battle in the condo between all the people renting out condos and the ones who bought them and are actually living in them. The owners want the renters out, but the flippers can't sell the condo's, so the need the rent money to make ends meet. It's a disaster.

Additionally, another huge condo building is going up across the street. It will be available next year. Meh.

"unless the developer were required to kick in for the amount given away in the incentive."

The reserves are paid for by the person on title for the condo - usually the developer on the unsold units. The reserves are for things like the common areas like roofs, paint, parking lots.

What the developer is trying to avoid at all costs is dropping the sales price. This is because a lot of banks use those prices as comps to determine how much to loan. In addition, at the turnover meeting, he gets to face the first-in buyers who may not be real happy.

Personal opinion, I think SoWa will be a ghost town for a while. So Mr Adams is going to have to play some games to justify spending another $100M in site improvements (like finishing the landscaping and fixing the I-5 access.)

Steve is right, the developer is not letting new buyers not pay the dues, he is paying them for the buyer rather than taking a price hit. Either way the flipper gets hurt.

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