Thursday, September 11, 2008

Pro Bono

Quite a few folks who read this blog are lawyers. You may demur, but web logs tell no tales. So I would like to pose a question to the iurisconsultus among you, prompted by a comment to yesterday's post.

The comment:

I'm pretty sure that part of the Metropole purchase agreement was a requirement that the owner occupy - or at least maintain ownership of without renting - the property for a minimum of one year after closing.

I've seen this other places to minimize "flipping." The newly-formed condo association can probably vote to change the rule, but I actually think it's a good one provided there are exemptions for life events like sudden long-term disability, job loss, or birth of a child during the first year (or perhaps while waiting for construction). As for a "flipper," would someone want to casually open herself to legal action by breaking a contract? I'm not sure.

My question: assuming a developer has added such a clause to a purchase agreement, is it enforceable once deed has transferred to the purchaser? I'm hard pressed to believe anyone can control when a property owner can sell his/her property.

What say you, avvocati?


Anonymous said...

Well, I don't know how the contract between the Metropole and existing purchaser was drafted, but sure you could do something like that. Imagine a will that says something like "I bequeath my home to my daughter so long as she obtains a college degree; otherwise it goes to my son (who already has a degree!)"---it's just basically conditional, so they could say something like "I sell you this property so long as you don't sell it within a year; if you sell it, you owe me $X and I have the right to retake possession." Buyers and Sellers are free to draft whatever crazy contracts they like. And for potential resale buyers, all this junk would be turned up by the Title Search company when they do their work because it would have to be filed with the deed (and if it isn't discoverd, the buyer should be covered by that Title Insurance policy people often don't see the need for!).

Keith said...

I would hope that no one would sign such a contract without first consulting a lawyer, but I suspect many didn't during the boomtimes.

Anonymous said...

"Anon said
Buyers and Sellers are free to draft whatever crazy contracts they like."

Agreed - generally speaking, a complete restraint on alienation (i.e. no sales whatsoever) is probably invalid, but a reasonable restraint (one year, exceptions for emergencies, etc), will likely be enforceable.

Anonymous said...

Can you please inform us how many units have sold at DuMont at 423 Mass Avenue NW

Thank you

Keith said...

Re: the Dumont: the District's real property sales database doesn't show any sales recorded for that address.

watchington said...

You actually turn on the key point in your post, Keith.

Anonymous is wrong worrying about the difference between fee simple subject to a condition subsequent vs. fee simple defeasible.

That's not it.

The issue is what survives the contract. Nothing in the contract matters at all post closing -- what matters is what's recorded on the deed.

Should the Metropole contract specify that the DEED will state "Whatever", then the condo board is powerless. Should the contract not specify what the DEED will state, then you can absolutely refuse to settle if they offer anything at closing less than a full warranty deed.

Anonymous said...

Watchington: Anonymouse is correct that if it's not in the contract it won't make it onto the deed. So the contract's gotta be correct. And if it's in the contract and important to a sophisticard party (of which I assume of the Metropole's developer), then you bet your bottom dollar its gonna make it onto that deed.

Keith said...

I bought a condo in DC in 1988 and have little memory of the closing.

In the District, is the deed available at closing for the buyer to review to determine whether such language has been added prior to placing his/her signature on the paperwork?