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?
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.