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Flipping of
Condo Hotel Units
Q: If
I reserve a condo hotel unit in the pre-construction
phase, can I flip it and assign my condo hotel unit's
contract to somebody else prior to closing?
A:
In most cases, the answer is "no." Developers
don't want to sell to speculators who could artificially
inflate prices and who will eventually compete with
them to sell their units.
For that reason, contracts typically
state that assigning of the contract is not permitted.
However, I have seen some clever buyers get around
this contractual clause. They simply buy the properties
using a Limited Liability Company (LLC) as the purchaser.
They then sell the LLC, with the sole asset in the
company being the property that they have contracted.
I would advise you to consult an attorney
before doing this. And I certainly don't want to suggest
that you should try to circumvent the intention of
the developer's contract. I'm just telling you that
I know that there are many investors who always buy
properties using an LLC for this reason.
The above question was submitted via
e-mail by a visitor to www.condohotelcenter.com.
The answer was prepared by Joel Greene, a licensed real
estate broker with Condo Hotel Center which specializes
in the sale of condo hotel units and fractional ownerships
in private residence clubs.
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