Page 10 - New England Condominium July 2020

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Certified Public Accountants 20 Freeman Place Needham, MA 02492 Tel: (617) 566-3645 (866) 842-0108 Fax: (866) 681-2377 www.DALCPAPC.net DAL CPA See Our Display Ad on Page 9 BetterVent is a NEW kind of Indoor Dryer Vent. www.adr-products.com 1-888-609-5512 Condominium and Real Estate Law Phone: (781) 817-4900 Direct: (781) 817-4603 Fax: (781) 817-4910 We may be dressed up, but we aren’t afraid to get our hands dirty. www.lawmtm.com Solving your problems today & strengthening your association for tomorrow. 6 Lyberty Way, Suite 201 Westford, MA 01886 (978)496-2000 www.perkinslawpc.com INSURANCE Accounting • Auditing • Taxes • Consulting Worcester 67 Millbrook Street 508-797-5200 Grafton 80 Worcester Street 508-839-0020 Holden 795 Main Street 508-829-5544 M Love Associates, & LLC Certified Public Accountants Serving Condominium Associations mlove 2.25 x 2.5 condo association color 9.19.2017.indd 1 9/19/17 12:59 PM See Our Display Ad on Page 7 See Our Display Ad on Back Cover pandemic and are overwhelmed with un- certainty, there is already more outbound migration in the ‘city-to-suburban’ nar- rative.” Many city-dwellers with second homes have become COVID-19 refugees, fl eeing the city for exurban areas like the Hamptons on Long Island, the Hudson Valley, the Berkshires in Massachusetts, and New Jersey’s shore and horse-farm country. Th ere has also been an exodus of young families to both nearby suburbs and distant destinations, where managing chil- dren is easier. Overall, though, Miller says he sees the market recovering easily. He indicates that market factors aff ecting the value and pricing of apartment homes had begun to settle into some sort of natural equilibrium before the COVID-19 crisis. He expects that trend to continue once the real estate based management company Gumley transaction process can resume fully. Th at view is borne out by numbers pub- lished by the Greater Boston Association couple of rejections on the basis of price. of Realtors (GBAR) as recently as March, It’s not common. Purchase price is cer- when the scale and scope of the pandemic tainly something a board would look at, was really becoming apparent. Accord- ing to the group’s report, prices were up build value—but each building has its own for March, despite much of the region fi nancial criteria. Co-op boards look at an being shut down and residents sheltering application, analyze it, apply their build- in place due to the pandemic; the median ing’s criteria, and then determine whether sales price for a house in Greater Boston they need more information, whether was $640,000 in March, which was an in- crease of 6.8 percent from the same month they will reject the proposed purchaser. If a year before; the median price of a condo for any reason a board believes that they was $619,950, up 12.7 percent annually. Since then, listings for units have taken they would typically decline to interview a dip—March numbers were down more them. We tell our boards that if they are than 50% from the previous year in Bos- ton—but according to industry pros, that’s should not go forward with the interview. more a refl ection of brokers suspending Th at is generally accepted advice by legal showings and condo buildings banning and management consultants.” non-residents from entering, including brokers and prospective buyers, than an market is going to reset. Buyers and sell- overall market trend. As states and cities ers are going to reset their expectations begin the phased process of reopening, along with the market. I don’t think people consensus seems to be that demand will are going to dump apartments way below rebound and competition between buyers market. I don’t see that happening. People will resume—though it may take weeks or will wait for the market to settle down. months for things to really feel ‘normal’ in And then, if they want to get out...for that regard. On a Micro Scale So what does this uncertainty mean for co-op and condo owners and, by exten- sion, for how boards make their decisions in regards to sales of units? Condominium boards have little grounds upon which to reject a prospective purchaser, other than the purchaser’s inability to meet fi nancial obligations. In co-ops, though, boards have the power to reject a sale for any rea- son, or for no reason at all. According to Miller, “Th e heavy layer of uncertainty all of us are grappling with makes boards more conservative in their decisions. It is the same outcome seen in the lending community as they continue to mitigate risk through more conserva- tive LTVs \\\[loans-to-value\\\], higher credit scores, and enjoying the spread by not let- ting rates drift much lower.” Th e question is whether a board can choose to reject a sale on the grounds of wanting to maintain a particular price level within the building. According to Phil Simpson, an attorney with Robinson Brog, a law fi rm based in New York City, “Co-op boards do just that. Th eir reason or justifi cation—never put into writing, of course—is to protect overall value in the building. Remember, they do not have to give reasons for their decision to reject a purchase; they just cannot violate the anti- discrimination laws of New York City and New York State. People may fi nd it hard to sell, even if their expectations of a sale price have adjusted to the market, because boards may not approve sales because of that price \\\[being too low\\\].” An Experienced Manager’s View Daniel Wollman, CEO of New York- Haft , says, “In 30 years of managing co-ops and condos, I have seen no more than a because their job as a fi duciary is to help they want to interview the applicant, or if want to reject the proposed purchaser, not prone to approve the application, they Wollman goes on to say that “\\\[t\\\]he other reasons than COVID-19, they’ll sell their apartment. Do I see people running away and selling their apartment for any old price? No. It’s a waiting game, and the market will rise again in time.” In the meantime, the consensus among market-attuned pros is that boards of both condominium and co-op properties should proceed with rational, business- judgement-driven decision making, rather than reacting to rumors or unsubstantiat- ed hunches. Th at’s not only the best way to survive and thrive past the current crisis, but good advice even in calmer times. n A J Sidransky is a staff writer/reporter for New England Condominium, and a published novelist. THE PRICE IS ...RIGHT? continued from page 9 See Our Display Ad on Page 9