Want to be a condo flipper? Concerned about condo conversions?
Well, the good news is that buyers of converted condominiums are going to be getting better contractual protections.
The bad news for real estate investors interested in condo flipping is that it’s going to be harder to rescind contracts before closing.
What does this mean for consumer protection?
“We realized that in condo law, there are strong protections for buyers of condos that should be in place for conversions as well,” Florida senator Gwen Margolis said. “Additional disclosures are needed,” she said. “These are not brand-new buildings. The buyer needs to know what condition the unit is in. Engineers have to stand by their reports.”
What this bill does is that it will insure tighter scrutiny of conversion inspection reports. Before this bill passed, there was no remedy for the condo purchaser. Developers who convert their apartments to condos will now have to establish a converter reserve fund for deferred maintenance and capital expenditures.
What does this mean for condominium flippers?
Condo flippers will now have more difficulty in proving that a developer violated contract terms. Although a developer is obligated to give a good-faith estimate of updated unit costs, the differences between the estimates and actual costs will no longer equal a material modification.
“If you’re a flipper and you want your money back, you may not like the bill”, Pete Dunbar, former chairman and a member of the state’s Condo Advisory Council, said. “People who intend only to flip have to find a way out. Now the question becomes what constitutes a material modification?”
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