My luxury rental building is converting to condos. What can I do to stay in my apartment?
Depending on the timing of the conversion, you may be able to hold onto your rental.
My luxury rental building is converting to condo. Each tenant was given the non-eviction plan that was filed with the Department of Housing and is awaiting approval. They are not signing new leases, but they can't evict anyone. What happens next? I have over a year left on my lease and I don't want to wind up living in the middle of a construction zone. What can I do to make sure I can remain in my apartment—and that I'll still have a decent quality of life here?
Whether you'll be able to hang onto your rental all depends on the timing of the conversion, our experts say.
Converting a rental building to a condominium generally takes at least one or two years. (You can read about the process in detail here.) The first step is for the building developer to have their plans approved of by the state Attorney General's office. Once plans are accepted, the office issues a document called the "black book," which allows the developer to begin selling condos.
This is the critical moment for tenants: "If your lease expires before the black book comes out, your landlord would prevail in eviction proceedings," says Kevin McConnell, a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph (a Brick sponsor.) "If the black book comes out before your lease expires, you have the exclusive right to purchase your apartment at the prices indicated in the book for the first 90 days after it's issued."
Don't expect to get a discount, though: If you want to purchase your apartment, you'll likely end up having to pay the listed price. You might, however, have the chance to continue renting your apartment.
"After the black book comes out, the landlord has to get at least 15 percent of the apartments under contract to declare the conversion plan effective," McConnell says. "If the tenant is in occupancy of the apartment with their lease at the time the landlord declares the plan effective, the tenant is entitled to remain on as a renter at the market rate."
The timing may not work out in your favor, but because condo conversions can take a couple years, you may also be able to avoid living in a construction zone before your lease expires. If not, you do have some recourse.
"Depending upon the age of the building, and the new owner’s conversion plans, you can expect construction, but it would most likely be confined to vacated units, saving common space for later, when the building is fully vacant," says Gordon Roberts of Sotheby's International Realty "You are entitled to peace and quiet for the duration of your lease, and you can report violations. I’d see how it goes – research the new owner’s reputation, see if they’ve done other projects."
You may find, he adds, that the building owners tend to be respectful of tenants.
Still, you should speak to your fellow tenants about how you'll respond if construction does become an issue, and consider banding together and consulting an attorney.
"The best thing to do is to organize a united effort with other tenants in the building. Residents of buildings undergoing conversions often form tenant associations and hire attorneys, architects, and/or engineers to protect their interests," says Jeffrey Reich, partner at the law firm Schwartz Sladkus Reich Greenberg Atlas. "An attorney experienced in representing tenant associations can often help residents prioritize their goals and to negotiation with the developer to address the residents’ concerns."
And at the end of the day, you may find that the condo conversion process was ultimately a gain for you and your fellow tenants.
"I have lived through a couple of conversions and I’ve been the sales agent on several other conversions, and the process is not an easy one to live through," says Deanna Kory, a broker with Corcoran. "However, if you are going to be there at the end of the renovations, the end result is generally much better than what it was previously. So many tenants who live there for a long time end up being quite pleased with their new lobby and hallways."
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