Uh-oh. The apartment took you weeks to hunt down. It has a bus stop half a block away and an alcove for your entertainment system. And now you find out the building is going condo.
For most renters, the official notice of conversion is at least an aggravation. It means moving again or forking over a pile of money to become an owner. For others-particularly the elderly, disabled or cash-strapped-the situation can be confusing or downright scary.
Sit back and count to 10. You have some rights here. Despite the horror stories of eviction and high-pressure sales tactics, the conversion craze of the ’90s is a different real estate animal than the one that foraged apartment buildings 20 years ago. Laws, both state and municipal, have since been enacted or strengthened to protect renters-whether they buy or not.
Dr. Harold Black admits he was “chagrined” this spring when he received notice his building was being converted into condominiums. He and his wife, Frances, had rented their Hyde Park apartment with a lake view for 23 years. The semi-retired couple took the developer’s proposal to their son, an attorney, and asked him to review it. A few days later they decided to buy into what is now the 1700 East 56th Street Condominium. They selected a different unit, one that is larger and two floors up.
Today he is comfortable with both the decision to buy and the conversion, he says. “Up to now nobody has pulled my chain on anything. The people I have dealt with have been pretty open and above board.” He is also undisturbed by the commotion of construction. The couple’s new unit will be completed before they move in. The building’s three-story garage is currently undergoing renovation, so “there are times when you should walk around with a gas mask. But (the developer) is taking steps to insure people will be going into a top drawer building” when it is finished.
Not all of his neighbors are as confident. “Some of the older people don’t know what to do,” he says. Some of the younger people at this point aren’t financially able to go into a condominium. They are not thrilled.” A group of them formed a tenants’ watchdog association to make sure the developer is living up to his promises and legal obligations. Several of the members decided to buy. “I guess they reassured themselves,” Black says.
Condo converters SHOULD take care of their renters, say the professionals who work in the business. Those who do buy-and about 20 percent will, on average-save the developer marketing costs. Those who don’t provide the income stream he needs to pay the bills.
“The problem is that reality raises its ugly head sometimes and if you’re not going to buy they tend to try to force you out,” says Ronald E. Foster of the Buffalo Grove property management firm, Foster Premier. The biggest abuses are “not giving people enough notice and enough time. One of the other ones that is hard to prove is pressuring someone to make a decision. People feel at mercy, even with a lease.”
The solution is to arm yourself with information. Know your rights and insist upon getting them. These vary somewhat from city to suburb. If the municipality where you live does not have its own conversion code, the Illinois Condominium Property Act applies. The City of Chicago and several suburbs have enacted codes that grant broader rights. Regardless of address, they fall into several categories:
– The right to know what’s going on. The developer is required to send each tenant a notice of intent to record the declaration, which officially says to the state, “Hey, we’re a condominium now.”
The Illinois Condominium Property Act requires that the notice of intent be given at least 30 days and not more than one year prior to the recording. The City of Chicago requires notice of at least 120 days. So does the Village of Oak Park, unless the tenant is over age 65 or disabled. These tenants get 180 days’ notice.
If you are interested in buying your unit you have the right to a whole bunch more stuff. The developer is required by state law to give you the declaration, bylaws, projected operating budget, and an accounting of the past two years’ expenses. If the building has more than six units, an engineer’s report is also required. Chicago developers must provide a detailed property report, which includes names and addresses of all parties involved in the conversion, a reserve study, a list of proposed construction projects and their costs and statements of litigation. In Oak Park, village officials inspect the converted unit 30 days before closing and you get a copy of their report, which includes any building code violations.
– The right to have your lease honored. No matter what is going on in other corners of the building, you have the right to the terms of your lease. You might be inconvenienced by noise and a constantly occupied freight elevator, but you don’t have to move yet.
In older buildings, a common scenario is for the developer to replace the windows. He can do this while you’re living there but you’re entitled to compensation, such as rent abatement and/or temporary shelter. “You can take the position of constructive eviction,” says Charles Braun, real estate and finance attorney with Horwood, Marcus & Braun in Chicago. “You can expect the developer to put you up in a hotel, probably not by law but by negotiation. It’s a good idea to consult with an attorney before being bulldozed by a developer.”
The developer has another right that can prove bothersome to a tenant-the right to show the unit to prospective purchasers. In Chicago he can do this 30 days after you receive your notice of intent. In municipalities governed by state law, units can be shown at appropriate hours during the last 90 days of tenancy.
Evanston developers must give tenants at least two days’ notice for making repairs or inspections.
– The right to at least four months to relocate. If your lease is due to expire within 120 days of the date you receive the developer’s notice of intent, you are entitled to extend your lease on its present terms for 120 days from the time you receive the notice. The extension is not automatic. You must notify the developer in writing within 30 days of receiving his notice that you intend to extend your lease.
In the City of Chicago you are considered a “protected tenant” if you are over the age of 65, blind, deaf or unable to walk without assistance. Protected tenants may extend their leases for 180 days.
In the City of Evanston no tenant may be required to vacate upon less than 210 days’ notice, except for violations of the rental agreement.
For some tenants, the very thought of moving constitutes a genuine hardship. The developers of 1700 East 56th Street Condominium, where the Blacks elected to purchase, have compiled a roster of housing possibilities and offer counseling to those uncertain about their futures. The City of Evanston goes even further. Its condominium ordinance requires developers to provide financial assistance to tenants whose income the previous year was no more than 80 percent of the median income for Cook County.
– The possible right to renew your lease. In larger buildings, where the conversion could take a couple of years, tenants may be able to renew their leases. The developer, in his notice of intent, must tell you whether you can renew your lease any new terms if you do renew. Typical, however, is a provision in the new lease that allows the developer to terminate the lease with a 90-day notice.
You might also find changes in the availability of amenities. “If there is parking in the building the developer will begin to sell parking spaces to residents,” says Braun. “As your lease comes up your parking space may no longer be available to you. Instead of the one you’ve had for years, now you get space 15.”
– The right to purchase. Here you get a couple of chances. Along with the notice of intent the developer must include a schedule of selling prices and an offer to make an owner out of you. He gives you a time limit, usually 30 days, and probably a discounted price to boot.
Suppose you can’t make up your mind. For the next 120 days you have the right of first refusal. This means if the developer finds another buyer for your unit, you can match the terms and buy. Tenants who are over the age of 65 or disabled get 180 days.
What can you do to protect your interests during a conversion? Well, what you can’t do is stop it. A landlord has the right to convert. But you can get a copy of the code that applies to your municipality and read it. Ask questions of the developer and sales agents and keep asking them until you get answers.
“Before you elect to renew or extend you should demand a list of all improvements being made,” says Braun. “You want to know what impact the conversion will have on your right of quiet enjoyment.”
“Hire a lawyer you trust and look at your alternatives,” advises Foster. “You can’t let yourself get scared by it. If you really like the place and enjoy living there, try to buy it. If you look at all the conversions today, probably 75 to 80 percent were successful and people did well for themselves. If you don’t want to buy and still want to live there, try to find an investor who wants a good tenant. Some developers will do that to try to get investors to buy.”
