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Sale of condominium buildings heats up

Q. I own a unit in a large condominium association in Illinois. The board is attempting to sell all the units pursuant to Section 15 of the Condominium Property Act. I believe the sales price is too low. The board did not obtain an appraisal, or hire a broker, and it appears the board found the buyer on its own.

The board did put the deal to a vote of the owners, and it obtained the vote of 75 percent of the owners to approve the sale. The transaction is proceeding. What remedies, or lawsuit, would you recommend to stop the transaction and allow the owners to get fair market value?

A. The sale of an entire condominium building is a "hot" real estate transaction these days in the Chicago area. The board of an association contemplating such a transaction would be well served to consult with an attorney and law firm concentrating in condominium law and experienced in these transactions. These are not like a typical commercial or residential real estate transaction, and there are many potential pitfalls for the uninformed board or attorney.

If the necessary approval of the owners was obtained for the sale of the entire property, as required by Section 15 of the Condominium Property Act, your view as to the sufficiency of the sales price may be isolated. Section 15 of the act provides that once the necessary owner approval is obtained, it is the duty of every unit owner to execute and deliver such instruments and to perform all acts as in manner and form may be necessary to affect such sale.

Therefore, if the proper procedure was followed by the board to approve the sale of the entire building, and the required number of owners approved, you are bound to proceed.

That said, the act does include a procedure that an owner can invoke if the owner does not agree with the value of their interest in the property under the transaction. However, the procedure is only available to an owner if they did not vote in favor of the sale.

The procedure I am referring to requires an owner to file a written objection to the sale with the manager or board of managers within 20 days after the date of the meeting at which such sale was approved. The owner is then entitled to receive from the proceeds of the sale an amount equivalent to the greater of: 1) the value of his or her interest, as determined by a fair appraisal, less the amount of any unpaid assessments or charges due and owing from such unit owner, or 2) the outstanding balance of any bona fide debt secured by the objecting unit owner's interest that was incurred by the unit owner in connection with the acquisition or refinance of the unit owner's interest, less the amount of any unpaid assessments or charges due and owing from such unit owner. The objecting unit owner is also entitled to receive from the proceeds of a sale under reimbursement for reasonable relocation costs, determined in the same manner as under the federal Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended from time to time, and as implemented by regulations promulgated thereunder.

If there is a disagreement as to the value of the interest of a unit owner who did not vote in favor of the sale of the property, and who filed a timely objection, that unit owner has a right to designate an expert in appraisal or property valuation to represent him. Thereafter, the prospective purchaser of the property must designate an expert in appraisal or property valuation to represent him. Both of these experts then mutually designate a third expert in appraisal or property valuation. The three experts constitute a panel to determine by vote of at least two of the members of the panel, the value of that unit owner's interest in the property.

• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.

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