Patent Publication Number: US-2003236676-A1

Title: Process for funding multi-unit real estate projects

Description:
BACKGROUND OF THE INVENTION  
       [0001] The present invention relates generally to the field of real estate financing and more specifically to a process for funding the construction or conversion of multi-unit real estate projects, each with proceeds from sales of individual units therein at discount prices to entice quick funding by deferring the developer&#39;s profit, with each such unit sale at discount including a unit resale contract so that the developer might have the opportunity of profiting on the re-sales of those units.  
       [0002] Unit ownership in multi-unit real estate projects is as old as Rome. The word “condominium” is taken from Latin. As population increases, transportation and communication restraints require increased densities and thus the need for more multi-unit projects. As the cost of desirable amenities and good locations increase, sharing their costs in a multi-unit project gives the occupants more value than by each paying for them as single homeowners. All occupants want the advantages of owning real estate to have inflation build equity rather than increase their rent. These are the driving forces that have and will continue to increase the demand for unit ownership in multi-unit real estate projects and encourage their construction and conversion.  
       [0003] Common forms of multi-unit real estate Projects are residential apartments, townhouses and even single-story detached houses, office buildings and campuses of commercial, industrial and retail spaces, resort and time-share units, marina slips and even airplane hangers.  
       [0004] Common rights of multi-unit real estate ownership include any range of rights from fee-simple title to shorter-term leaseholds of either the entire bundle of rights or somewhat less, either in time or by including or excluding mineral rights, appurtenances, easements or access to amenities.  
       [0005] Ownership of multi-unit real estate Projects can be organized in many forms of association for ownership and management of their units or time therein and their common elements and areas. These forms include condominiums, time-shares, floating or fixed interval rights and cooperative stock ownership with Unit leases.  
       [0006] The investment advantages of Unit ownership in a multi-unit real estate Project include less risk because each Unit Owner individually owns 100% of his one individual Unit without risking his investment for the obligations or liabilities of the other Unit Owners beyond funding just his one Unit&#39;s maintenance and share of the common elements, more control because he can sell, lease or hold his individual Unit, rather than depending on the Developer if he had a minority share in a real estate syndication, and better borrowing power because each Unit Owner can get his own mortgage loan secured by just his one Unit to buy, improve or borrow against the equity in it.  
       [0007] Given the predictability of increasing real estate prices, tenants have come to recognize that owning their Unit is the best way to limit increases in their occupancy cost. Groups of tenants have organized and purchased their building from the landlord. As they have later re-sold their Units at a profit, Developers have come to see that there is a profit to be made in building or converting for sale of individual Units.  
       [0008] However, to get Project funding, Developers have had to convince Financial Partners and Construction Lenders. Of those Projects that have been built or converted, some have successfully sold-out, but others have not, creating foreclosure and unit-valuation problems that have made it harder for following Developers to obtain funding for further Projects. The result is that Project funding is virtually impossible in all but the largest markets and to all but the strongest Developers. The result of these restrictions on Project funding is that the cost of Units has increased to offset the risk, and no Projects are getting built if they are too small or too large or if they are in smaller markets or in lower-income or marginally outlying areas.  
       [0009] The risks of Project development avoided by the present invention are many and easily explained:  
       [0010] Partial Unit Sale Risk˜Because a Project takes years to develop, build and sell all the Units, prices, sales absorption rates and sales prices can change as can construction costs and mortgage interest rates. So, what gets planned to be quickly built and easily sold often does not. With slow unit sales, a Developer and his Financial Partners will default on the Project Construction Loan. The Construction Lender then will have to sell the remaining Units or sell the whole Project as a rental project. Construction Lenders have found that it is almost impossible to sell remaining units (usually the majority) because the early Unit Buyers are both unhappy and disruptive. Thus, to prevent foreclosure of a partially sold project, Construction Lenders prevent Unit sale from closings until most of the Units are pre-sold. This makes it harder for the Developer to sell Units, because he must convince each potential Unit buyer to wait until most of the Units are sold before any Unit Buyers can close and move-in.  
       [0011] Unit Value Dilemma˜Because Units might not quickly re-sell during the Developer&#39;s initial sales campaign and Unit mortgage lenders recognize the power of the Developer&#39;s marketing efforts to establish Unit prices that might not be sustainable, institutional Unit mortgage lenders will not lend to Unit buyers on conventional terms offered to other home buyers until after the Project&#39;s Units are substantially sold-out. This imposes a further risk to the Developer and Financial Partners to either subsidize such Unit mortgages or risk waiting until the substantial portion of the Units is pre-sold before closing any Unit sales. The development risks and costs are thus increased and must be reflected in higher Unit prices. More importantly, Projects don&#39;t get built if they are too small or too large or if they are in smaller markets or in lower-income or marginally outlying areas.  
       [0012] Conversion Decision Risks˜Most all multi-unit rental Project Owners have an institutional permanent mortgage loan on their Project. Such loans do not permit sale of individual Units. So, the Project Owner must incur the up-front costs of refinance to a more expensive Interim Loan in order to convert for Unit sales. Moreover, tenants who do not want to buy will leave when they hear that their Unit might be sold. Without some surety that all the Units will sell, many Project Owners do not convert and miss-out on the substantial profits that could be made from Unit sales. Also, many Project Owners cannot raise the funds for renovations without the additional value created by Unit sales, and those Projects deteriorate rather than get renovated and sold to individual Unit Buyers who would benefit from homeownership and take better care of the Project.  
       [0013] The present form of funding of construction or conversion of multi-unit real estate Projects with Unit ownership entails the following steps:  
       [0014] The Developer first gets control of the real estate and obtains permits to construct or convert it to a multi-unit Project with Unit ownership,  
       [0015] The Developer then gets a Construction Lender to provide a Construction Loan for most of the purchase, construction or conversion costs, if and when:  
       [0016] The Developer and its Financial Partners guarantee and/or provide additional collateral to secure timely payment of the Construction Loan, and/or  
       [0017] The Developer pre-sells most or all of the Units to further assure the Construction Lender of the Project&#39;s profitable and timely sell-out prospects, and  
       [0018] The Developer provides a competent builder, Unit sales and Project management team.  
       [0019] The Developer and its Financial Partners provide the equity for the remainder of the purchase, construction or conversion, marketing, financing, interest and operating costs through the projected Unit sell-out period,  
       [0020] Construction then starts and then completes, as Unit sales continue because some pre-sold Retail Unit Buyers get lost during the multi-year time between their Unit reservation and Unit delivery only after completion and satisfaction of the Lender&#39;s “pre-sale” requirement,  
       [0021] The Developer then has to replace Retail Unit Buyers to reach the Construction Lender&#39;s “pre-sale” requirement under threat of forecloses on the entire Project.  
       [0022] These multiplied risks are inherent in the present form of funding multi-unit Projects for Unit ownership. The risk of profitably selling enough Units in a multi-unit complex before the Construction Loan comes due is all concentrated in the Developer/Financial Partners entity. Because the risk is high in dollars, time and probability of success, Investors wealthy enough to take these risks are few, and the profit required to involve them increases Unit prices and limits the number of Projects that get built to just those in major and growing markets.  
       [0023] The Financial Partners&#39; risk is substantial because their investment is committed at start of construction, and construction and sales can take 2 to 4 years. Everything can change in that time. In recent years, mortgage interest rates have fluctuated in a range from 6% to 16%, there has been an oil crisis, terrorism attacks, stock market fluctuations, a high-tech boom and bust, military base closures, 2+ wars, recessions, employment dislocations and tax law changes, all of which have effected Unit marketability, affordability and ability of potential Unit Buyers to finance their purchase.  
       [0024] Also, Construction Lender requirements restrict the number of Projects that can be built or converted because: Construction Lenders&#39; cost of underwriting the risks is so expensive that only larger projects can afford such costs by spreading them among more and higher-valued Units; the expertise required to underwrite such Projects is so complicated that it is found only in larger Construction Lenders who must fund only larger projects to afford to compensate their higher priced staff, and there are fewer investors who have the high net-worth and the willingness to risk the larger amount required to guaranty an entire Project to the Construction Lender than there are smaller investors who are willing to take the risk on just one Unit.  
       [0025] These multiplied risks of Project financing by one Developer and its Financial Partners now require that Unit market values be more predictable, and that is possible only if there are many comparable Units already in the market. This combination of requirements is found only in major urban centers or resorts that are in their growth phase, so smaller, more stable, outlying and lower-income communities don&#39;t qualify and don&#39;t get multi-unit Projects built there.  
       [0026] With the present invention, Construction Lenders and Financial Partners are eliminated. They are replaced by Wholesale Unit Buyers. Because the Wholesale Unit Buyers get title to and pay for all Units at start of construction, there follows that: there can be no Project foreclosure, because there is no Project Lender; all funds for construction, marketing and operations through projected sell-out are funded at construction start from Wholesale Unit purchases; and Developer&#39;s investment is then only his time and potential profit.  
       [0027] With Project Conversion Loans, additionally the Developer must pay-off the whole present permanent mortgage loan on the entire Project with a new Conversion Loan because that existing Permanent Lender won&#39;t permit the sale of just one Unit. Permanent Lenders just do not have the staff or profit potential to justify administering the conversion process. The need to payoff the present permanent loan creates a major risk for the Project Owner of committing to a new Project Conversion Loan without knowing if enough Units will sell at projected Retail prices to at least break-even.  
       [0028] With the present invention, these risks would be avoided. Full funding from sales to Wholesale Unit Buyers would be available when needed and thus assure payment of all costs before having to pay-off the present permanent loan. The present invention has these advantages for the Developer:  
       [0029] The process of getting and keeping Financial Partners would be eliminated,  
       [0030] The process of getting a Construction Lender would be eliminated along with:  
       [0031] Retail Unit “pre-sale” requirement,  
       [0032] Project foreclosure threat,  
       [0033] Personal Guarantee and Pledge of other assets against risk of loss on sell-out.  
       [0034] The need to get and keep “pre-sale” Retail Unit Buyers to satisfy a Construction Lender would be eliminated,  
       [0035] Sales to Wholesale Unit Buyers would provide 100% cost funding at start of construction or conversion,  
       [0036] Developer&#39;s cost of funds would be Re-Sale Contract payments to Wholesale Unit Buyers.  
       [0037] Developer&#39;s profit would be earned on Retail Unit sales by assignment of Unit Re-Sale Contracts,  
       [0038] If funds from Wholesale Unit Buyers and Retail Unit sales do not provide enough to keep paying Unit Re-Sale Contract payments, the Developer would not be foreclosed on the entire Project, but only suffer Cancellation of Re-Sale Contracts on those Units on which it could not continue payments.  
       [0039] Thus, the Developer&#39;s risks would be only the loss of profits, once it has funded Wholesale Unit sales at start of construction or conversion.  
       [0040] Thus, the Developer has greater control of the Project development without a Construction Lender or Financial Partners.  
       [0041] The present invention has these advantages for the Real Estate Industry:  
       [0042] More projects would get built because Developers could more readily get 100% Project cost funding from a group of Wholesale Unit Buyers rather than from one Construction Lender,  
       [0043] More projects would get built in smaller markets, lower-income neighborhoods and in outlying areas where there are many potential Wholesale Unit Buyers willing to invest/buy one Unit at a price discounted to cost, but where present Construction Lenders and Financial Partners are not now economically available.  
       [0044] More projects would get built because the Wholesale Unit Buyers investment risk would be for only one Unit and thus less risky than the Construction Lender and the Financial Partners risk on the entire Project resulting in a lower return needed to entice him to invest.  
       [0045] Thus, the financial cost of producing Units would be less, perhaps reducing their prices and resulting in more Units being built in areas not now served.  
       [0046] The present invention has these advantages for the smaller Wholesale Unit Buyer as investor:  
       [0047] Greater control of his investment by buying 100% of a single Unit rather than a minority share in a Project syndication.  
       [0048] Unit ownership at start of construction or conversion eliminates the possibility of foreclosure if Developer defaults and stops making Re-Sale Contract payments. The Unit could then be rented or sold without delay to maintain income or recoup investment.  
       [0049] Unit ownership would not be exposed to the risks of other investors or Unit owners in the Project defaulting as would be the case in minority investment in a Project syndication.  
       [0050] Unit purchase at a discount because of the Developer would defer its profit. This should result in:  
       [0051] Minimizing risk of loss of investment on resale,  
       [0052] Ability to rent the Unit to provide a return on investment should the Developer default on Re-Sale Contract,  
       [0053] Completion Guaranty would insure against delay or default in completion of construction.  
       [0054] The present invention has these advantages for the Retail Unit Buyer:  
       [0055] Ability to close Unit purchase before now permitted by Construction Lender restrictions, and even during construction, whereas present Lender Restrictions requiring “pre-sale” would prevent early closing. This would permit early planning for decoration and furnishing without fear that Developer&#39;s failure to reach “pre-sale” would prevent closing.  
       [0056] Get Unit mortgage from the Wholesale Unit Buyer, until most Units are sold and conventional mortgage loans are thereafter available  
       BRIEF SUMMARY OF THE INVENTION  
       [0057] The primary object of the invention is to transfer the risk of multi-unit real estate Project construction and conversion from one Developer and its Financial Partners taking the risk on all Units in a Project to a Project funding structure in which many individual Unit Buyers each take the risk on only one Unit each so as to:  
       [0058] Increase availability of funding for construction or conversion of multi-unit real estate Projects,  
       [0059] Lower the cost of Units in multi-unit real estate Projects or increase the Developers&#39; profits,  
       [0060] Increase feasibility of building Projects in smaller markets, lower-income areas and outlying locations;  
       [0061] Provide smaller investors with real estate investments over which they can have more control and which have lesser risks, and  
       [0062] Provide Retail Unit Buyers with availability of earlier closing dates and interim Unit financing.  
       OBJECTS OF THE INVENTION  
       [0063] The object of the invention is to more readily provide Developers with 100% of Project construction or conversion funds and marketing and financial costs, all from Wholesale Unit Sales by offering them each at a lower price by the Developer deferring its profit until Retail Unit Sales close.  
       [0064] Another object of the invention is to expand the availability and lower the cost of such Project funding by eliminating the Developer&#39;s need for a Project Construction Lender who delays Retail Unit sale closings thereby eliminating the overall Project sell-out risk of Project foreclosure, replacing the funding source with proceeds from Wholesale Unit Buyers who need risk the much smaller investment of the price of an individual Unit, thereby reducing the return required to attract capital for funding Project construction or conversion.  
       [0065] Another object of the invention is to eliminate the need for Financial Partners who have to make a large financial equity investment and perhaps guaranty and/or pledge additional assets to secure the Construction Lender against Project sell-out risks by replacing the Construction Lender with proceeds from Unit sales to Wholesale Unit Buyers.  
       [0066] Yet another object of the invention is to give the Developer more control over its Project design and potential for profit by replacing funding source of Financial Partners and one Project Construction Lender with many Wholesale Unit Buyers.  
       [0067] Another object of the invention is to enable the Developer to have the option to be taxed at Capital Gains tax rates on sale of its Project rather than at Ordinary Income tax rates on sale of the Units.  
       [0068] Another object of the invention is to give the Developer the option to be insulated from construction-defect liability to Unit Owners by structuring the Project development process so that the Unit Owners&#39; Association does the construction or conversion.  
       [0069] Yet another object of the invention is to avoid the legal, control and securities reporting requirements, delays and costs of syndication, replacing them with the more familiar rules of real estate sales and Unit owners&#39; association structures.  
       [0070] A further object of the invention is to give the Developer more readily available Project funding by sale of individual Units to Wholesale Unit Buyers, because it should be easier to sell the individual Units than to borrow the entire Project&#39;s cost from a Construction Lender and find Financial Partners to guaranty that Project Loan.  
       [0071] Still yet another object of the invention is to give the Wholesale Unit Buyer a more conservative real estate investment because risks of loss on sale or rental would be substantially lowered by buying at a discount, and by eliminating delays of foreclosure or inability to act independently as in a syndication structure where each would be a minority Financial Partner of a Developer.  
       [0072] A further object of the invention is to provide Wholesale Unit Buyers a real estate investment that each can own without partners, thus giving each more control of that investment, without having to share the risk of Project failure or be a minority owner under the control of a syndicating Developer.  
       [0073] Still yet another object of the invention is to give the Wholesale Unit Buyers ownership at the start, so they each will have the ability to immediately rent or sell their individual Unit if the Developer or Re-Seller defaults on its Re-Sale Contract payments, with no delay of foreclosure since each would already have title to the Unit.  
       [0074] A further object of the invention is to give the Unit Buyers each the option to have a Unit Completion Guaranty to replace a portion of the Re-Sale Contract payments or provide a return on the price each paid until delivery of the completed Unit that each can then rent, sell or use.  
       [0075] Another object of the invention is to give the Unit Buyers each separation from construction decisions so that they each would not be subject to Unit Completion Guarantor&#39;s defenses, to better insure that they each get timely guaranty payments.  
       [0076] A further object of the invention is to give the Wholesale Unit Buyers the option to offer interim loans to Retail Unit Buyers of their Unit until conventional Unit mortgage loans are available, thus giving the Wholesale Unit Buyer an option to extend his investment time and increasing the likelihood and the price at which such Retail Unit Buyers would buy.  
       [0077] Another object of the invention is to give Retail Unit Buyers each the availability of financing for purchase of a Unit from the Wholesale Unit Buyer of that Unit before the substantial number of Units are sold to Retail Buyers, as is otherwise presently a restriction imposed by Project Construction Lenders fearing the possibility of having to foreclose on a partially sold-out Project.  
       [0078] A further object of the invention is to give Retail Unit Buyers each perhaps a lower price if the potentially lower financial costs of the present invention are passed-on rather than used to increase the Developer&#39;s profit.  
       [0079] Yet another object of the invention is to encourage more construction and conversions of multi-unit real estate Projects that are otherwise unfinancable by present Project Construction Lenders and Financial Partners because such proposed Projects:  
       [0080] Are in smaller, lower-income, unstable or outlying markets,  
       [0081] Have unusual or untested design or location,  
       [0082] Have too few Units or too many Units to justify the underwriting costs of a Construction Lender.  
       [0083] Other objects and advantages of the present invention will become apparent from the following descriptions, taken in connection with the accompanying drawings, wherein, by way of illustration and example, an embodiment of the present invention is disclosed. 
     
    
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
     [0084] The drawings constitute a part of this specification and include exemplary embodiments to the invention, which may be embodied in various forms. It is to be understood that in some instances various aspects of the invention may be shown exaggerated or enlarged to facilitate an understanding of the invention.  
     [0085]FIG. 1 is a flow chart of the Project Funding Process in accordance with a preferred embodiment of the present invention showing the steps, wherein the nine 9 types of Parties enter into eight (8) types of Agreements and execute-fourteen 14 types of Steps to accomplish eight 8 types of Events to accomplish Project funding; these Parties, Agreements, Events and Steps are all illustrated on FIG. 1 attached to this patent application and are enumerated as follows:  
                                   PARTIES:   AGREEMENTS:                                                P1   Developer   A1   Funding Plan Agreement       P2   Plan Administrator   A2   Wholesale Unit Sale                   Contracts(s)       P3   MarketinglSales Team   A3   Retail Unit Sales Contract(s)       P4a   Wholesale Unit Buyer(s)   A4   Unit Mortgage Loan(s)       P4b   Retail Unit Buyer(s)   A5   Unit Completion Guaranty(s)       P5   Unit Completion Guarantor(s)   A6   Unit Re-Sale Contract(s)       P6   Unit Mortgage Lender(s)   A7   Fund Control Agreement(s)       P7   Owners&#39; Association   A8   Interim Loan(s)       P8   Building Team       P9   Unit Re-Seller(s)                     EVENTS:                         E1   Closing of all Unit Sales       E2   Construction Start       E3   Construction Completion       E4   Retail Unit Sale Closing(s)       E5   Cancellation(s) of A6s                  
 
     [0086]                               STEPS:                                                S1   Define Project Funding   S6   Fund Purchase Prices of           Process       A2s &amp; A3s       S2a   Deliver Project, ready   S7a   Grant Construction           to build       Responsibility       S2b   Pay Land Debt and   S7b   Deliver Funds for Fund           Reimburse P1       Control       S2c   Administer A1   S8   Deliver Construction                   Documents       S2d   Administer Marketing &amp;   S9a   Fund Control Construction           Sales           S3a   Sell Units to Wholesale Unit   S9b   Direct Project Construction           Buyers       S3b   Self Units to Retail Unit   S10   Construction or Conversion           Buyers       S4a   Grant A4s   S11a   Deliver A6s to P9s       S4b   Monthly Unit Mortgage Loan   S11b   Re-Sell Units to P4bs           Payments       S5a   Grant A5s   S12   Monthly Re-Sale Contract                   Payments       S5b   Grant Lender&#39;s Rights in A5s   S13   Grant Interim Loans       S5aD   Make monthly payments   S14a   Deliver Unit, Profit, Interim           from E5 to E3       Loan pay-offs       S5bD   Make monthly payments   S14b   Distribute Profits on Retail           from E5 to E3       Unit Re-Sales.                    
    
    
     DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS  
     [0087] Detailed descriptions of the preferred embodiment are provided herein. It is to be understood, however, that the present invention may be embodied in various forms. Therefore, specific details disclosed herein are not to be interpreted as limiting the scope of the invention to the particular form set forth, but rather, it is intended as a basis for the claims so as to include such alternatives, modifications and equivalents as may be included within the spirit and scope of the invention, and as a representative basis for teaching one skilled in the art to employ the present invention in virtually any appropriately detailed process, method, system, structure or manner.  
     [0088] In accordance with a preferred embodiment of the invention, there is disclosed on FIG. 1 a process for funding the construction or conversion of multi-unit real estate Projects, especially residential condominium complexes, each with proceeds from its Unit sates at discount prices S a,  with each such Unit sale requiring a Unit Re-Sale Contract A 6  so that the Developer P 1  or Re-Sellers P 9   s  might have the opportunity to realize profits on such Re-Sales E 4  of those Units to Retail Unit Buyers P 4   bs.    
     [0089] To accomplish the functions of the invention, FIG. 1 shows how the present invention process proceeds, comprising four 4 phases:  
     [0090] Phase  1 ˜Plan Agreement: In accordance with the primary function of the invention, in its preferred embodiment, the Developer P 1  would have a Project ready to build S 2   a,  usually with permits, plans and studies approved, Unit prices scheduled, construction costs confirmed, values and absorption rates appraised, marketing/sales planned and team members agreed. The Plan Administrator P 2  would define the Project Funding Plan A 1  with the Developer P 1 , get Unit Completion Guaranties A 5   s  from Unit Completion Guarantors P 5   s  and Unit Loans A 4   s  from Unit Mortgage Lenders P 6   s.  Then, the Developer P 1  and Plan Administrator P 2  would enter into a Project Funding Plan Agreement A 1 .  
     [0091] Phase-2˜Unit Sales: Turning again to FIG. 1, the preferred embodiment of the invention process provides that the Marketing/sales Team P 3   s  would then market S 3   a  Units directed by the Developer P 1  and administered S 2   d  by the Plan Administrator P 2  to get Sale Contracts A 2   s  for all Units in the Project from Wholesale Unit Buyers P 4   as  and perhaps also sell Units S 3   b  to get Sale Contracts A 3   s  from Retail Unit Buyers P 4   bs.  To encourage sales to Wholesale Unit Buyers P 4   as,  the Units would be priced at a discount and low enough in order to entice a quick sell-out. The major part of the discount offered would be accomplished by deferring the Developer&#39;s profit S 14   b.    
     [0092] Phase-3˜Construction or Conversion; Turning again to FIG. 1, the preferred embodiment of the invention process also provides that when all Units have been sold S 3 , all funds required for Project Construction S 10 , land, marketing and Unit Re-Sale Contract Payments S 12  through projected sell-out period would be funded S 6  and there would be a Closing E 1  of all Unit sales wherein:  
     [0093] The Unit Buyers P 4   as  &amp; P 4   bs  would form an Owners Association P 7  and vote to adopt and proceed with the invention Project Funding Plan Agreement A 1 ,  
     [0094] The Developer P 1  would sell the Project S 2   a  to the Owner&#39;s Association P 7  or to a separate party,  
     [0095] The Unit Mortgage Lenders P 6   s  would grant S 4   as  Unit Mortgage Loans A 4  to the Unit Buyers P 4   as  &amp; P 4   bs,    
     [0096] The Unit Completion Guarantors P 5   s  would issue Unit Completion Guaranties A 5   s  to Unit Buyers P 4   as  &amp; P 4   bs  S 5   a  and to their Unit Mortgage Lenders P 6   s  S 5   b,    
     [0097] The Wholesale Unit Buyers P 4   as  would grant and deliver S 11   a  Unit Re-Sale Contracts A 6  to the Developer P 1  or to Re-Sellers P 9   s.  Exclusive right-to-sell listing agency contracts could replace Re-Sale Contracts A 6   s  to provide Developer P 1  and/or Re-Sellers P 9   s  the opportunity to profit on Re-Sales S 14   b.    
     [0098] The Unit Buyers P 4   as  &amp; P 4   bs  could close, transfer title, etc. E 1  on their purchases of all Units and pay for their respective purchase prices S 6 ,  
     [0099] The Owner&#39;s Association P 7 , or separate party, would take the Unit sale proceeds and responsibility for building the Project S 7   a,  perhaps augmented with funds from the Developer&#39;s P 1  other sources, and deposit them S 7   b  to be Fund Controlled S 9   a  by the Plan Administrator P 2  pursuant to a Fund Control Agreement A 7 ,  
     [0100] The Owner&#39;s Association P 7  would deliver and activate construction contracts S 8  with the Building Team P 8 ,  
     [0101] Start Construction or Conversion E 2  and direct Project Construction S 9   b,    
     [0102] The Building Team P 8  would then complete Construction or Conversion S 10 .  
     [0103] From initial Closing E 1 , the Re-Sellers P 9   s  could close Unit Re-Sales S 11   bs  to Retail Unit Buyers P 4   bs,  so long as the Re-Seller made monthly Re-Sale Contract Payments S 12  on the Unit Re-Sale Contract A 6  on that Unit,  
     [0104] Phase4˜Re-Sales to Retail Unit Buyers: Turning again to FIG. 1, the preferred embodiment of the invention process provides further that at any time in the process after initial Closing E 1 , Units are available for Re-Sale S 11   b  to Retail Unit Buyers P 4   bs,  so that:  
     [0105] At each Retail Sale Closing E 4 , the Wholesale Unit Buyer P 4   a  of that Unit would be re-paid his price, including the profit negotiated in his Re-Sale Contract A 6 , and  
     [0106] Funds would be provided at initial Closing E 1  for such monthly Unit Re-Sale Contract Payments S 12   s  as well as for marketing costs into Fund Control S 12  and would be administered by the Plan Administrator P 2 .  
     [0107] If, however, the Re-Seller P 9  stops making monthly Unit Re-Sale Contract Payments S 12 , the Wholesale Unit Buyer P 4   a  of that Unit could cancel E 5  the Unit Re-Sale Contract A 6  and thereupon be free to rent, sell or use that Unit free of further rights of the Developer P 1  or Re-Seller P 9 .  
     [0108] Unit Completion Guaranties:˜To accomplish an important function of the invention, there is shown also on FIG. 1 that the invention process provides for Unit Completion Guaranties E 5   s  directly to Unit Buyers P 4   as  &amp; P 4   bs  to insure them against losses due to construction delays, defaults and/or cost overruns, comprising the steps  
     [0109] Structuring the Building Team&#39;s P 8  Project&#39;s construction or conversion S 10  decisions and activities S 7   a  to be made S 9   b  by the Owners&#39; Association P 7  or by a separate party being granted construction responsibility S 7   a  so that Unit Buyers P 4   as  &amp; P 4   bs  are not subject to defenses on Unit Completion Guaranties E 5   s,    
     [0110] Unit sales S 3   as  &amp; S 3   bs  to Unit Buyers P 4   as  &amp; P 4   bs  with closing E 1  and payment therefore before Construction or Conversion Start E 2 , and  
     [0111] Issuance of Unit Completion Guaranties Ass to Unit Buyers P 4   as  &amp; P 4   bs  at that closing E 1 .  
     [0112] Should Construction S 10  be delayed, each Completion Guarantor P 5  would make all or part of the Unit Re-Sale Contract Payments S 12  to that Wholesale Unit Buyer P 4   a  and to the Unit Mortgage Lender P 6  for that Unit, as agreed in the Unit Completion Guaranty A 5  for that Unit until Construction Completion E 3 , at which time rental or resale by the Wholesale Unit Buyer P 4   a  could then carry or recoup his investment.  
     [0113] Interim Loans to Retail Unit Buyers:˜To accomplish another important function of the invention, there is shown also on FIG. 1 that the invention process provides for Interim Loans A 8   s  to Retail Unit Buyers P 4   bs,  comprising the steps of:  
     [0114] Unit sales S 11   b  to Retail Unit Buyers P 4   bs,  each pursuant to a Unit Re-Sale Contract A 6  by the Developer P 1  or Re-Seller P 9 ,  
     [0115] The ability of Retail Unit Buyers P 4   bs  to close their Unit purchases before completion E 3  and sell-out of most of the Project&#39;s Units as is otherwise required by Construction Lenders in existing Project funding processes,  
     [0116] The availability of an Interim Loan A 8  from the Wholesale Unit Buyer P 4   a  of each Unit to provide Unit financing until the Retail Unit Buyer P 4   b  of that Unit can obtain a Conventional Permanent Mortgage Loan, which in existing Project funding processes are available only after the Construction Lender gives a partial release of its lien, which usually requires more than 50% of the Units to have been pre-sold and then delayed until they can all be closed simultaneously after Construction Completion E 3 .  
     [0117] Such Interim Loans S 13  would be paid-off when the Retail Unit Buyer P 4   b  refinances or sells that Unit S 14   a.    
     [0118] Turning again to the FIG. 1 flow chart of the present invention, the following items show what is old and already known in existing Project funding processes with Construction Loans and Financial Partners, and what is new in the present invention:  
     [0119] What is old and already known is that a Developer P 1  with a Project ready-to-build S 2   a  is required to start the Project funding process,  
     [0120] What is old and already known is that in existing Project funding processes there are requirements of underwriting Project feasibility S 1 , appraising prospective Unit sales prices, profit potential, costs and quality of the Development Team.  
     [0121] What is new in the present invention is that the underwriting S 1  is not done by a Project Construction Lender because there is none, but rather by a Plan Administrator P 2  which would then administer S 2   c  the Project funding process.  
     [0122] What is also new in the present invention is that Unit sales S 3   s  to Wholesale Unit Buyers P 4   as,  and perhaps to Retail Unit Buyers P 4   bs  are all closed E 1 , and paid for before Construction Start E 2  and thus provide 100% of Project costs, including construction, marketing and financial carrying costs, and payoff land debt and perhaps reimburse Developer&#39;s costs S 2   b.  This eliminates the risk of Project foreclosure by a Project Construction Lender due to slow Unit sales absorption, because in the present invention, the need for a Project Construction Lender is eliminated as is the need for Financial Partners to provide equity to guaranty the Project Construction Lender against failure of Unit sales.  
     [0123] What is old and already know is that in existing Project funding processes, there are Fund Control Agreements A 7   s  and procedure to administer Construction or Conversion S 10  expenditures appropriate to better provide for Construction Completion E 3  on time and at budget.  
     [0124] What is old and already known is that in existing Project funding processes, marketing and sales to Retail Unit Buyers S 3   bs  are required.  
     [0125] What is new in the present invention is that there is no Construction Lender, so Retail Unit Buyers P 4   bs  can each independently close E 4   s  their individual Unit purchases:  
     [0126] Without waiting for release from a Project lien and a pre-sale requirement to be met as is required by Project Construction Lenders in existing Project funding processes, and  
     [0127] Without threat of Project foreclosure by a Project Construction Lender because of a default by any other Unit Buyer or Developer P 1 , thus enabling Retail Unit Buyers P 4   bs  to better plan their finances and occupancy moves.  
     [0128] What is also new in the present invention is marketing and sales S 3   as  to Wholesale Unit Buyers P 4   as  at a discount tow enough to entice quick sell-out by deferring Developers profit S 14   b,  each combined with delivery S 11   a  of Unit Re-Sale Contracts A 6   s  so the Developer P 1  or Re-Sellers P 9   s  might realize profits S 14   b  on Re-Sales E 4   s.    
     [0129] What is also new in the present invention is funding of all Project costs from such sales to Wholesale Unit Buyers P 4   as,  and perhaps also to Retail Unit Buyers P 4   bs,  with all Unit Buyers paying for their Units before Construction Start E 2 .  
     [0130] What is most importantly new in the present invention is including Unit Re-Sale Contracts A 6   s  from Wholesale Unit Buyers P 4   as  to give the Developer P 1  or Re-Sellers P 9   s,  the opportunity to profit from Re-Sales S 11   b  to Retail Unit Buyers P 4   bs.    
     [0131] What is old and already known is that Unit Completion Guaranties A 5   s  to Unit Retail Buyers P 4   bs  who pay their purchase price up-front are required to insure them against losses due to construction delays, defaults and/or cost overruns in some jurisdictions in order to permit the Developer P 1  to use such payments for Construction or Conversion S 10 . But in existing Project funding processes, Retail Unit Buyers&#39; P 4   bs  titles or contract rights to their Units are each subject to the lien of a Project Construction Lender who would have a common lien on all Units. This exposes each Retail Unit Buyer P 4   bs  to a foreclosure risk because of default of the Developer P 1  on the Project Construction Loan before Construction Completion E 3 . Although that Retail Unit Buyer P 4   b  would get the price back, the Unit&#39;s titles could not be given to that Retail Unit Buyer P 4   b  free of such Project foreclosure risk, so he could not plan to move-in because he would not know that he would get his Unit. The resulting requirement is that Retail Unit Buyers&#39; P 4   bs  funds must be kept in escrow or the Developer P 1  must provide a cash bond, further increasing the cost of Project development.  
     [0132] What is new in the present invention is that the Unit Buyers&#39; P 4   as  &amp; P 4   bs  titles or contract rights are not subject to Project foreclosure risk and are free of Project Construction Lender&#39;s pre-sale restrictions because there is no Project Construction Lender.  
     [0133] What is also new in the present invention is that Completion Guaranties A 5   s  are granted S 5   a  also to Wholesale and Retail Unit Buyers P 4   as  &amp; P 4   bs  and granted S 5   b  also to their Unit Mortgage Lenders P 6   s.    
     [0134] What is also new in the present invention is that the Retail Unit Buyer P 4   bs  can thus buy a Unit before Construction Start E 2 , close before Construction Completion E 3  and plan to move-in on Construction Completion E 3 , without the risk that the Developer&#39;s P 1  default might force a change in his moving plans. And if Construction Completion E 3  is delayed, the Unit Completion Guarantor P 5  will compensate him S 5   a D and pay all or part of his Unit Mortgage Loan A 4  payments S 5   b D until his Unit is completed and delivered to him.  
     [0135] What is old and already known is that a Developer P 1  could sell a Project S 2   a,  ready-to-build, to an Owners&#39; Association P 7 , or another, and its profit would be taxed at capital gains tax rates.  
     [0136] What is new in the present invention is that Re-Sellers P 9   s  can, by getting Unit Re-Sale Contracts A 6   s  get a separate opportunity for income on the same Project upon Re-Sales S 11   b  of those same Units to Retail Unit Buyers P 4   bs,  thus enabling the Developer P 1  group to better segregate the profits derived from property appreciation from those profits attributable to the work of development and sales to most efficiently limit their taxes on profits.  
     [0137] What is also new in the present invention is that by selling the Project before Construction Start E 2 , the Developer P 1  could be more insulated from construction-defect liability suits by the Owners&#39; Association P 7  or a separate party directing the Building Team P 8  and/or the Project operator.  
     [0138] What is old and already known is that in existing Project funding processes, no Unit Mortgage Loans A 4   s  can be secured by an individual Unit until the Project Construction Lender agrees to a partial release of that Unit. Thus, a group of Unit Buyers could not get individual loans secured by just their Unit to finance Project Construction or Conversion. Each Unit Buyer would have to join with others to get a Project Construction Loan. Such combinations would require a Developer and usually take the form of a syndication limited partnership or limited liability company to insulate each Unit Buyer from the liabilities on the entire Project. The resulting loss of control virtually eliminates the Unit Buyers from being the investors, thus giving rise to the need for Financial Partners and adding another level of profit and complication to the development process.  
     [0139] What is new in the present invention is that each Unit Buyer P 4   as  &amp; P 4   bs  can purchase, pay for S 6  and get title to E 1  just one unit before Construction Start E 2 , and thus get S 4  a Unit Mortgage Loan A 4  from a Unit Mortgage Lender P 6  secured by just his Unit, without partners or the loss of control associated with being a minority equity owner in a development syndication,  
     [0140] What is new in the present invention is that the Closing of all Unit Sales E 1  before Construction Start E 2  funds Project costs provides funds for Re-Sale Contract Payments S 12   s  to each Unit Buyer, so that each Unit Buyer can make monthly Unit Mortgage Loan Payments S 4   bs  and/or get a return on the Unit purchase price until their Unit is either resold S 11   b  pursuant to its Re-Sale Contract A 6  or free to his use, rental or re-sale.  
     [0141] What is also old and already known is that in existing Project funding processes, no Interim Loans can be secured by an individual Unit until the Project Construction Lender agrees to a partial release of that Unit. Interim Unit Loans A 8   s  are thus delayed until the Project Construction Lender&#39;s “Pre-Sale” requirement is met and Construction Completion E 3  before it permits any partial releases of Units. These requirements delay closing of sales to Retail Unit Buyers P 4   bs,  increase the Developer&#39;s P 1  risk of loosing pre-sales because of the long time-delay, and require that the Developer P 1  to get Financial Partners to further guaranty the Project Construction Lender in order to shorten that delay. All this delay increases Project risks and costs and thus prevents Projects construction or conversion in all but the most large, established and growing areas.  
     [0142] What is new in the present invention is that each Wholesale Unit Buyer P 4   a  would already have received clear title to each individual Unit by buying it E 1  before Construction Start E 2 , thus any Wholesale Unit Buyer P 4   a  could transfer title during construction to a Retail Unit Buyer P 4   b,  free from any Project Construction Lender&#39;s lien on all Units, because there would be no Project Construction Lender.  
     [0143] What is also new in the present invention is that Wholesale Unit Buyers P 4   as  replace the need for Financial Partners, because there is no need for the Developer P 1  to provide equity and guaranties to a Project Construction Lender, because there is none. All Project funding is provided, up-front, by Unit sales S 3   s  in the present invention.  
     [0144] What is also new in the present invention is that the Wholesale Unit Buyers P 4   as  would have already paid for their respective Units either with their cash or with funds borrowed from Unit Mortgage Lenders P 4   s.  Thus, all Wholesale Unit Buyers P 4   as  would already have funds invested in their Units available to provide an Interim Loan A 8  to the Retail Unit Buyer P 4   b  of their Unit, either by:  
     [0145] Seller financing from personal funds, or  
     [0146] Assumption of the Unit Mortgage Loan A 4  from the Unit Mortgage Lender P 6  by the Retail Unit Buyer P 4   b  of that Unit, thus making such Interim Loans A 8   s  far more available and earlier in the Construction and Unit Sales process, even well before Construction Completion E 3 , and at a lower cost.  
     [0147] What is also new in the present invention is that Unit Mortgage Lenders P 6   s  could get a good first lien on an individual Unit free of foreclosure threat by a Project Construction Lender, even before Construction Completion E 3  and without waiting for a pre-sale requirement to be met, because there would be no Project Construction Lender in the present invention Project funding process.  
     [0148] What is old and already known is that in existing Project funding processes, is that a smaller real estate investor&#39;s ability to invest in a multi-unit real estate Project is limited to either investment in a very small project or as a minority investor in a syndication.  
     [0149] What is new in the present invention is that an individual small investor can purchase a single Unit in a multi-unit real estate project prior to its construction, and thus improve his investment position by having ownership of a Unit of real estate without any partners rather than owning a minority interest in a syndication partnership or limited liability company, thus giving the smaller real estate investor:  
     [0150] More control over the investment,  
     [0151] More liquidity, and  
     [0152] Less legal process and delay should there be a default on the Unit Re-Sale Contract A 6 .  
     [0153] What is also new in the present invention is its structure that enables a group of Wholesale Unit Buyers P 4   as  to combine with a Developer P 1  to build or convert more Projects and Projects in locations that are otherwise too small or too large or in smaller markets or in lower-income or marginally outlying areas where existing Construction Lenders and Financial Partners find it too risky or cannot profitably underwrite and provide Project funding. Such groups of smaller real estate investors would each have smaller risks, smaller invested amounts, greater control and more liquidity in their investments, thus enabling them to more readily provide Project funding.  
     [0154] Most significantly, what is new is that by using the present invention, a Developer P 1  in any small community could get funding to build a  10  or so Unit Project by selling the Units at discount to local business people. With appraisals of the Units&#39; sale-value to show the profit potential and appraisals of their rental-value to cover the Wholesale Unit Buyers&#39; P 4   as  down-side risk, and by noting that their risk would be in buying just one Unit per buyer with a Completion Guaranty A 5 , and by providing a Unit Mortgage Loan A 4  to each Unit Buyer P 4   as,  a Developer P 1  could get Project funding committed with perhaps one presentation at a local business club luncheon. This could result in more condominium Units getting built, quicker and with lower financial risk, cost and delay; and building housing quicker and at lower financial cost is better for everyone.  
     [0155] While the invention has been described in connection with a preferred embodiment, it is not intended to limit the scope of the invention to the particular form set forth, but on the contrary, it is intended to cover such alternatives, modifications, and equivalents as may be included within the spirit and scope of the invention as defined by the appended claims.