With the demand for apartments in Chicago rising, many real estate developers have discovered a previously untapped supply of potential acquisition targets — residential condominium buildings. This includes older condominium properties plagued by large deferred maintenance obligations and stagnating or declining unit sales prices. While the process for converting condominium buildings into rental properties can be more time consuming and labor-intensive than acquiring an existing apartment building, patient investors often see hidden value opportunities. They are able to capitalize on the spread between a building’s higher value as a rental property versus its lower value as an owner-occupied condominium building. Purchasing all of the condominium units in an existing building is not your typical real estate purchase. Because of the unique issues involved and the potential voluminous amount of documents involved, both the condominium association (the Association) and the buyer should be represented by experienced counsel with the bandwidth to handle the simultaneous closing of potentially hundreds of units. The counsel should also have a deep familiarity with condominium law, and in particular, Section 15 of the Illinois Condominium Property Act (the Act). Statutory overview Deconversion is the term that has become widely used in the real estate industry to …
