Q: We recently bought a condominium unit in a new 50-unit complex. The developer will not tell us how many units have been sold, but we recently learned that it is starting to rent some of the unsold units. This seems unfair, especially because our contract states that we cannot rent our unit for at least one year after settlement. Can the developer rent those units?
A: A few years ago, prospective buyers were lining up at developers' doorsteps, clamoring to buy condo units. Many speculators entered the picture, hoping to make a killing by buying low and flipping to a third party even before the units were ready for sale. Others wanted to buy solely to be able to rent the units.
Many developers then started to impose rental and resale restrictions. The most common were requirements, built into the purchase and sales contract, that limited a buyer from renting the unit out for at least one year. Other provisions either prohibited a buyer from flipping the contract or made it so that if the buyer wanted to sell within a certain period, the developer had right of first refusal at the original purchase price.
Times changed. Now, developers are stuck with many unsold units, either because demand shrank or because contract buyers are just walking away from deals -- often forfeiting their earnest money deposit.
Developers argue that they are required to pay the condominium fees on these unsold units, and thus there is no harm to those who have already bought a unit. On the other hand, the current owners claim that this is unfair because it is often difficult to get good financing when there are too many renters in a condominium complex.
Source:http://www.washingtonpost.com/wp-dyn/content/article/2007/10/26/AR2007102600952.html
A: A few years ago, prospective buyers were lining up at developers' doorsteps, clamoring to buy condo units. Many speculators entered the picture, hoping to make a killing by buying low and flipping to a third party even before the units were ready for sale. Others wanted to buy solely to be able to rent the units.
Many developers then started to impose rental and resale restrictions. The most common were requirements, built into the purchase and sales contract, that limited a buyer from renting the unit out for at least one year. Other provisions either prohibited a buyer from flipping the contract or made it so that if the buyer wanted to sell within a certain period, the developer had right of first refusal at the original purchase price.
Times changed. Now, developers are stuck with many unsold units, either because demand shrank or because contract buyers are just walking away from deals -- often forfeiting their earnest money deposit.
Developers argue that they are required to pay the condominium fees on these unsold units, and thus there is no harm to those who have already bought a unit. On the other hand, the current owners claim that this is unfair because it is often difficult to get good financing when there are too many renters in a condominium complex.
Source:http://www.washingtonpost.com/wp-dyn/content/article/2007/10/26/AR2007102600952.html
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