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  #1  
Old 07-28-2005, 02:18 PM
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Chris Colston Chris Colston is offline
 
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I'm in the process of doing a condo conversion. I've had the order for awhile and have been asking for the purchase agreement. The property was originally a small apartment building (12 units) that was pretty much decimated during Hurricanes Frances and Jeanne. Now some investment firm out of Miami is going to convert the units to condo. I finally received the purchase agreement.....most of it is in very small print that I need a magnifying glass to read except this paragraph:

Quote:
In accordance with Section 718.502(5) Florida Statutes, Seller makes the following disclosure: PURSUANT TO THE CONVERSION INSPECTION REPORT, THE ROOF WAS NOT PROPERLY INSTALLED AND DOES NOT MEET FLORIDA BUILDING CODE REQUIREMENTS FOR DRAINAGE AND FLASHINGS DETAILS. THE DEVELOPER WILL NOT THE REPLACE THE ROOF. Not withstanding the foregoing, Seller has acquired a warranty for the roof of the Condominium which warranty runs for a period of five (5) years and expires April 5, 2010.
Anybody know who would lend on THAT? I'm wondering if the lender read it or if they just rely on us to tell them. Oh yeah, and the closing is scheduled for a year from now...my value will be useless by then. Now I know why it took so long to get the contract.

Would any of you touch this request? I'm thinking of sending this one back to the lender.
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Old 07-28-2005, 02:59 PM
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TEL2002 TEL2002 is offline
 
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Just disclose. Why not do it. YOu have a guaranteed new assignment in a year.
  #3  
Old 07-28-2005, 04:04 PM
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Pamela Crowley (Florida) Pamela Crowley (Florida) is offline
 
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Hey Chris,

Scope of Work and Hypothetical Condition!!!!!

Plus, BIG fee!

:rainfro:
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Old 07-28-2005, 04:14 PM
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Chris Colston Chris Colston is offline
 
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There's no hypothetical...it's blatantly out there in the open...The roof does NOT comply to code requirements and WON'T be fixed.
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  #5  
Old 07-28-2005, 04:39 PM
Randy Beigh Randy Beigh is offline
 
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Would I loan on it? Yes, absolutely. If I was a lender, lending is what I do. Now, the criteria changes for the additional risks involved. That could include larger down payment, higher interest rates, making sure I was in 1st position, and whatever I forgot.
  #6  
Old 07-28-2005, 04:56 PM
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Carnivore Carnivore is online now
 
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Yes, You go ahead and loan on tha Randy because I wont without lots and lots of additional information from D3P's.

hmmm, lets see roof was not properly installed. What could they mean by that?
Do they mean the shingles? Do they mean the underlayment and shingles.

Or

Does this mean the Complete roof system? Yowser!!! Whooo hoooo! Lets see now, Hypothetical, 3 floors that means four units per floor translates into a guesstimated 4000 sft flat commercial grade roof. Hmmmm, whats the cost of that? Whats actually hidden underneath?

Wonder what else does not meet code?
  #7  
Old 07-28-2005, 05:07 PM
Randy Beigh Randy Beigh is offline
 
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Andrew,

It's all about risks. If you are being paid enough to take those risks, then life is good. This is not some conventional loan where the borrower will be paying 5% interest with 95% loan. If the interest is high enough(say 10%) and the down is 30%, the risks may be palatable to the lender.

I worked for a company who was always analyzing the risk and judging the interest rate. The typical lender may decline this, but the question was would anyone touch this. The answer is an absolute yes. They used the HPC's for what they were meant to be used. :lol:
  #8  
Old 07-28-2005, 06:30 PM
Roger R. Patzold Roger R. Patzold is offline
 
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Why send it back? To let some skippy do it, not mention the roof problem, and let the investor get burned.

Call the lender first and the:

Do the appraisal;

Make the necessary statements;

Provide a cost to cure;

Provide a value "as is" and a value "as repaired".

Good Luck
  #9  
Old 07-28-2005, 08:31 PM
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Chris Colston Chris Colston is offline
 
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Well here's another tid bit from the contract:

Quote:
Seller has fully funded the reserves for the air conditioning system of the Condominium which the Association is responsible to repair, maintain and/or replace. Seller has not funded the reserve accounts for plumbing or the roof, and as such, the Seller is deemed to have granted to the Purchaser of each unit in the Condominium the warranties provided by Section 718.618(6)
I'm going to have to find out if this means the A/C for the common area, if any, or all of the central A/C for each unit. It is my experience that in most condos, each unit has it's own A/C system

I'm also getting ready to ask for the budget and condo docs. I'm not sure either are ready or available yet.

Quote:
Why send it back? To let some skippy do it, not mention the roof problem, and let the investor get burned.
The lender has been informed. Actually I'm not sure who the lender will be, the client is that company with "Tree" in the name that supposedly "provides 4 companies to compete for your business".

The whole thing is going to be "SUBJECT TO COMPLETION" anyway. There are contractors working there right now. As of last week there was no record of the 12 distinct units in the tax records, just one big apartment building. Today there are 12 separate units with brand new folio numbers. Two story, 6 units per floor, 884 sf, 1/1, selling for $284,000 (pre construction)!! Roof is mansard...flat tar/gravel/membrane.

With no reserves, I can't wait to hear what the condo fees are going to be!

My other question...who would buy one of these after reading this contract? The buyer I've got here is one of the principles in the investment holding firm that currently owns the building and is doing the conversion.

Quote:
It's all about risks. If you are being paid enough to take those risks, then life is good. This is not some conventional loan where the borrower will be paying 5% interest with 95% loan. If the interest is high enough(say 10%) and the down is 30%, the risks may be palatable to the lender.
Randy, I understand it's all about the risk, I'm just thinking the lenders in the TREE group don't take those kind of risks.
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  #10  
Old 07-28-2005, 09:29 PM
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Carnivore Carnivore is online now
 
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Chris,

They will take the risk, just as soon as you putr your signature on the line. :P
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