Juggling Tenants
Converters must handle a building’s existing residents with care. State laws vary on how converters must treat residents who live in an apartment building planned for conversion, but one principle remains the same from California to Maine: “You really have to protect yourself,” warns Bill Donges, CEO of Atlanta’s Lane Co. “Your coverage on how you handle renters in making conversions has to be done properly.”
In many places, renters often get the first chance to buy the units they occupy, and if they forgo that option, they still can stay until their lease ends. Until residents move out, though, converters must be prepared to educate them about the process. “They don’t understand what’s happening, and they’ve been renters for a lot of years,” says Kim Kirschner, CEO of Kirschner Realty International, a third-party sales firm based in Hollywood, Fla. “You tell them they won’t be kicked out and that no one will violate their lease.”
Even die-hard renters may change their minds. In Florida, residents at conversion properties get 45 days to decide if they want to buy their unit at the developer’s best price. “It’s probably the best opportunity they’ll ever have to own a property,” Kirschner says. “This forces them into it. A lot of people initially had no interest, but when they see the appreciation, they start talking to people and educating themselves. Then they pull the trigger.”
Tenants who aren’t buying must be kept informed of the process as well. “We try not to inconvenience them, but a launch is an inconvenience,” Kirschner admits. “We have people visiting their unit, camping out on the lawn, and parking in the parking lots.”
