Urban-renewal projects are an excellent opportunity for owners in old buildings — and a good one for developers. Over the years, parties emerged on the ground signing owners in potential buildings onto exclusivity (and even final) agreements, to pass the projects to developers. Usually the organizers' initiative advances the blessed process — yet the need arose to protect owners who aren't necessarily versed in the field. Hence the Urban Renewal (Agreements for Organizing Transactions) Law. So: why an organizer, who can be one, what to examine, what a non-shop is, and how to choose. Come — there are answers.
Why an organizer?
To ease the process — or when difficulties arise — owners can consider engaging a professional organizer: when they lack the professional knowledge, the time, or the ability to advance the project on their own. Sometimes a single building starts alone, only to discover it lacks economic feasibility for developers — and more buildings (and owners) must be joined for the project to pencil. There too, an organizer helps. In other cases the organizer approaches the owners on its own initiative.
Who can be an organizer?
An organizer is whoever contracts with an owner in an agreement to organize a renewal transaction, or acts toward such a contract. In practice: a diligent owners' representation, companies specializing in organizing renewal projects, real-estate agents, developer companies and the like. Customarily the organizer's fee is paid in full by the developer the owners choose. Note well — the law requires the organizer to act for the owners with loyalty, fairness and transparency, and to explain the agreement's essence, its main terms and its legal consequences, delivering promptly any material information it holds. (An organizing agreement is not brokerage; the Real Estate Brokers Law does not apply.)
The non-shop
A non-shop is an undertaking to refrain from negotiating or contracting with anyone else about organizing the building's owners or advancing a renewal deal, except with the organizer's consent. The organizer wants to test the building's potential and feasibility, and the time needed to assemble the required majority — so it asks owners to hold off for a limited period. But owners sometimes bind themselves in a one-sided, lingering undertaking they later struggle to exit, with consequences they never understood. Before signing anything of the kind, have the owners' attorney examine it in depth.
Parameters for choosing an organizer
- Familiarity with real estate generally and urban renewal specifically (laws, planning and building procedures).
- Proven renewal-project experience, including references.
- The interpersonal skills that move projects: credibility, consensus-building, diligence and efficiency.
- The fee and its payment milestones.
- Does the organizer act independently — or on behalf of a developer?
- Does the organizer have a personal interest in the deal?
- Does the organizer work with varied developers — or always the same ones?
How is an organizer appointed?
Before signing the organizing agreement, the organizer must convene the owners — announcing the gathering prominently in the building and by notice to each owner's known address, 7 days ahead. At the gathering the organizer presents itself and delivers the information the law requires; minutes are published afterward. A quorum of at least 40% of the owners is required. Where 40% didn't attend (in a building of at least 17 apartments), a second gathering is needed — provided the first drew at least 30% and the second at least 20%.
Signed with an organizer and unhappy?
The non-shop runs for a limited period only, and the law fixes milestones the organizer must meet for the engagement to stay alive. Miss them, and the non-shop can lapse — with no compensation to the organizer — leaving the owners free to advance the project themselves or with another organizer or developer. In any event, any non-shop stipulation contrary to the law that doesn't favor the owners is void.
Advancing together, efficiently
The deal touches your home — and the power is in the owners' hands: you are the landowners, and without your consent nothing moves. Don't rush to sign documents that could hobble you. Compare offers, collect recommendations, talk with neighbors and friends who've completed the journey happily. A reasonable, fair non-shop serves both sides; cooperation with a professional organizer can be a blessing — when the parties trust each other and the process runs loyally and transparently. To do it right, appoint the owners' attorney at the start, before signing with anyone involved.
Owners in an old building with a pile of questions? Come have a coffee with us, no strings. We accompany hundreds of residents, idea to key.
The above is initial information only and does not constitute legal advice or a substitute for it. Consult an attorney specializing in the field before taking any action.
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General information — not legal advice.