Problems with a special assessment, with the CCRs not reported in detail, Strib, this link (read it quickly before it goes offline).
Title insurance should disclose CCRs if they have been recorded (whether Minnesota law requires recording of original and amended CCRs is unknown to me - ask a lawyer). Prospective buyers should ask the real estate agent about "any CCRs" and do it in writing, to protect later rights in the event of nondisclosure or defective disclosre by a seller and/or the brokerage/agents.
If a prospective buyer has notice that a homeowners association exists, there is a duty of diligence, visit the office, see if there is a management contract, ask questions and ask for document copies to study prior to closing. A purchase and sale agreeement can be conditioned upon buyer's review of CCRs and governing arrangements and buyer's subjective approval. In a hot market buyer conditions may be waived if a purchase and sale contract specifies that back-up offers can be accepted and if unconditional they can preempt. In a present market situation, a moribund market, preemption by additional offers is unlikely. All of this is general info, known to many, and in individual cases use a lawyer for specific advice or later wish you had.
The Flaherty situation.
It is not uncommon for a builder-developer to insinuate an affiliated management company, even to use a local LLC management company apart from a management arm of the developer, to provide limited liability so that general liability is kept from creeping at the crabgrass.
One thing Ramsey should consider, I am uncertain if the detail is or is not yet finalized, but I would guess it's been left open. Make the easement on the parking spaces in personam [personal and not running with the land] to the specific LLC that is obligated to the city on city lending. Ditto for the waiver/compromise of SAC and WAC fees. Once City of Ramsey is fully paid off a contract could permit or obligate the City to change such things as running with the land - attached as a part of record of the Flaherty-Collins real estate.
That way if the city is stiffed on money owed, and has a right to take over the LLC, the developer cannot lawfully convey away the LLC assets to another adventuring LLC, or limited partnership, or whatever, of the parking and fee waiver rights, if they are made "personal" to a specific LLC "person" and not running with the land. A due on sale clause might go with such a protective security provision, AND for the lender's security, the more, the merrier.
Now, before the land's been conveyed, that needs to be finalized in favor of the city, since a conveyance of the land to Flaherty with easements and waivers appurtenant cannot later be undone by the City.
BOTTOM LINE: It is now or never, to protect taxpayer interests. Bray and Goodrich advise, but they do not make the decisions. Council caution, or profligate lack of due caution, will be the deciding thing.
Sunday, October 02, 2011
Caveat emptor. Think of a homeowners' association as another "taxing government" and association CCRs (covenants, conditions and restrictions) as yet another layer of "government codes and regulation" when considering a townhome purchase.
Posted by eric zaetsch at 11:56 AM