Legal Question in Real Estate Law in New Hampshire

Real estate - adult community

My parents are looking to purchase a apartment in a retirement community in New Hampshire. The community is being built now and they plan on moving in within six months. The are paying for the property in full and the arrangements are as follows, they are paying $200,000 for the property and when they die, they get 90% of the value back from the complex owners. The question I have is - how can they protect themselves from the complex owner going backrupt? Other thoughts, surety bonds, finance the property, reverse mortgage?? Your comments and guidance would be helpful.

Asked on 6/03/09, 8:24 am

2 Answers from Attorneys

Bruce L. Dorner Dorner Law Office

Re: Real estate - adult community

It is impossible to answer your question without examining all the ownership documents. I seriously doubt you will get the developer to purchase and post a surety bond in favor of your parents personally. It is possible, depending upon the nature and type of project, that there may be some governmental requirements to ensure completion of the project. Perhaps some portion of the funds might be escrowed pending completion of the project. However, I seriously doubt that we can find a perfect solution to your concern.

Meeting with an attorney and providing all the documents relating to the purchase is the first step to a proper analysis of your concern.

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Answered on 6/03/09, 9:04 am

Herbert Cooper Law Offices of Jameson & Cooper

Re: Real estate - adult community

Note that this forum is appropriate only for general information, and not for legal advice for specific circumstances. This answer is not intended to be legal advice.

Adult communities can be organized in a wide variety of ways, including outright ownership, in condominium, through leases, and through licenses or a contract specifically delimited rights and privileges.

Some types of organization offer less protection than others. If you have a deed for a specific unit (e.g., for a condominium), your rights are clearer than if you have only a license to use a certain unit. Depending upon the form of ownership, lenders may not be as willing to provide financing to an individual or couple seeking to purchase in such a community. In addition, one would need to review the contractual provisions carefully, as certain options may be precluded by contract.

There may be no easy answer, other than to obtain as much disclosure as possible from the developer, to verify the developer's reputation, to determine how many units have been sold and remain to sell, to determine how many other projects the developer has underway, etcetera.

In a normal development, rights of a unit owner may be subordinated to the developer's lender, but with appropriate provisions that would allow for the unit owner to have sufficient rights to obtain a mortgage. However, because of health qualifications and financial qualification requirements for some retirement communities, there may not be the same protections and rights in that situation.

Without a review of the specific contractual documents, it would be difficult to make any specific suggestions, other than to inquire with the developer how an apartment owner is to be protected in the event of financial difficulties for the developer.

In any event, it is a wise idea to engage an attorney prior to undertaking such a transaction. Please feel free to contact me if you need representation. I am licensed in NH and practice and live in Concord, NH in addition to my office in Massachusetts.

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Answered on 6/03/09, 9:08 am

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