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Old 12-02-2012, 01:14 AM
 
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I have a question: what happens when a condominium needs to be torn down?

What I mean by that is: Say a condominium building is getting old, and something is very wrong with it. Perhaps the concrete is rotten to the core. It's going to cost eight kabillion dollars to fix the building. It's just not financially feasible to fix the place. What happens then?

I'm currently putting everything I have into rental units that have been remodeled but are still 30 years old, just wondering if I eventually own 15-20 units paid in full and decide to hire a management co. and do some traveling, is there any threat of me being in big trouble down the road?
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Old 12-02-2012, 01:24 AM
 
Location: The North
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Very unlikely in Las Vegas. Buildings in the local climate can remain standing for 75 years or more without any structural concerns. What usually happens to older buildings is they get sold out for land value because they are just painfully outdated and each owner gets about what the market value or more for their unit. Remember there is depreciation in real estate so at some point the value of your unit will go down, especially as it becomes harder to attract tenants.
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Old 12-02-2012, 10:36 AM
 
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they turn them into apartments, and vice versa at times.
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Old 12-02-2012, 10:39 AM
 
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Quote:
Originally Posted by MSchu View Post
they turn them into apartments, and vice versa at times.
Rather easy to turn apartments into condos. Virtually impossible to go the other way. Even the big lease operations are leaving the units titled as condos.
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Old 12-02-2012, 11:31 AM
 
Location: Paranoid State
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One of the jobs of the HOA is to conduct reserve studies to make sure there is money in the bank to make all necessary repairs to keep the building operational. Once a defect is found, the HOA has an afirmative duty to conduct mitigating repairs.

There are two scenarios that you might be concerned with: (1) massive construction defects, and (2) a natural disaster.

All construction has defects, but few have the type of massive structural defect where the building cannot be salvaged. As a practical matter, I think any type of defect that threatens the viability of the building would have been found within the first several years. Latent defects that might affect the entire building's viability will most likely be found within 5 years.

The only thing to worry about at that point is deferred maintenance & natural disasters. Deferred maintenance would probably be noticeable.

Natural disasters are another thing. Earthquakes, floods, and fire are the things that come to mind.

So, if I were you, I would read my HOA documents specifically with respect to natural disasters & acts of God. The documents probably spell out what the HOA would do.
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Old 12-02-2012, 06:49 PM
 
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Condominium is a statutory form of ownership. Either the condominium can be repaired or the condominium can be terminated. There have been a number of cases where investors purchased a significant percentage of a condominium and then declared termination of the condominium. The remaining owners pretty much lost everything. The only "market" to be able to sell their units to was the investor group. The homeowners that previously owned their units were forced to sell at a big loss and then offered an opportunity to rent their own units back (as apartments) if they wanted to stay. The bigger problems you are likely to face before that happens are embezzlement (quite rampant), construction defects, and large losses due to lawsuits that the condo corporation will be advised to get itself involved in.
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Old 12-02-2012, 07:19 PM
 
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Originally Posted by IC_deLight View Post
Condominium is a statutory form of ownership. Either the condominium can be repaired or the condominium can be terminated. There have been a number of cases where investors purchased a significant percentage of a condominium and then declared termination of the condominium. The remaining owners pretty much lost everything. The only "market" to be able to sell their units to was the investor group. The homeowners that previously owned their units were forced to sell at a big loss and then offered an opportunity to rent their own units back (as apartments) if they wanted to stay. The bigger problems you are likely to face before that happens are embezzlement (quite rampant), construction defects, and large losses due to lawsuits that the condo corporation will be advised to get itself involved in.
That does happen. But only in certain states. It is virtually impossible to terminate a condo in the western states without total agreement. More likely way to end a condo will be through bankruptcy of the condo association.

Read your condo docs. They virtually always tell how it can be terminated and in general they cannot be...

For evil condo behavior follow the goings on at the Paradise Spa...where one individual owns the majority of the units and would love to get rid of the rest. He is not doing well so far.
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Old 12-03-2012, 08:40 AM
 
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Most buildings have an indefinite lifespan, if they're actively and sufficiently maintained. So if they place looks like it's well kept up, don't worry about it. If it looks like it isn't well kept up, you're going to have other major problems well before structural problems become an issue, and you probably want to avoid these places.
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Old 12-04-2012, 09:35 AM
 
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Originally Posted by lvoc View Post
That does happen. But only in certain states. It is virtually impossible to terminate a condo in the western states without total agreement. More likely way to end a condo will be through bankruptcy of the condo association.

Read your condo docs. They virtually always tell how it can be terminated and in general they cannot be...

For evil condo behavior follow the goings on at the Paradise Spa...where one individual owns the majority of the units and would love to get rid of the rest. He is not doing well so far.

Not true that condos cannot be terminated. They can be terminated in every state - even "western states". In addition to any provisions of the condo docs, many states provide a method of termination by statute. You will typically find the termination threshold to be 70% to 80% of the owners.

Bankruptcy would not work at all. The condo corporation has the ability to assess its members in order to pay its debts. See, e.g.,
Bankruptcy Won't Work - Why There's No Protection for Members When Community Associations "Go Broke"
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Old 12-04-2012, 11:07 AM
 
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Quote:
Originally Posted by IC_deLight View Post
Not true that condos cannot be terminated. They can be terminated in every state - even "western states". In addition to any provisions of the condo docs, many states provide a method of termination by statute. You will typically find the termination threshold to be 70% to 80% of the owners.

Bankruptcy would not work at all. The condo corporation has the ability to assess its members in order to pay its debts. See, e.g.,
Bankruptcy Won't Work - Why There's No Protection for Members When Community Associations "Go Broke"
It is not practical. Actually the author you cite agrees. The actual way he suggests is for the place to deteriorate far enough that the municipality condemns it.

NV law requires 80% which may be increased but not decreased in the docs. That might be a possibility in a small condo but not in anything of size.

I would tend to agree bankruptcy is a long shot...but so is every other way of terminating a condo.

Again watch the Paradise Spa. It is the most extreme case I know of in Las Vegas. And there the owners appear to be holding their own against a massive owner of more than 50% of the place.
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