Condominium Conversions
Why would you consider undertaking a condo conversion?
The short answer is: the property is worth more as individual units than as a single property.
Often multi-family properties may be built for the rental market, but external factors change and the For Sale market becomes more lucrative than the rental market.
In other cases, a large building may be purchased and renovated with new units created that did not exist in the unaltered state. In this case, too, the property owner may use a condo conversion to unlock the newly created value.
As long as there are no laws, rules or local zoning codes that prohibit the conversion, the condo conversion process can move forward.
What is involved in a typical condo conversion?
Most condo conversions require information about the property (survey, plat plans, unit drawings, legal description of the land) and the new condo association (offering statement, articles of incorporation, by-laws, budget, common element allocation and other condo rules and regulations). There are a number of fees involved in a condo conversion:
- First, a survey of the property is needed: This is not a fixed cost but tends to start at $1,000 for the perimeter survey and $400-$500 per Unit.
- Legal fees are driven by the number of units in the property. Assume a base of $2,500 and up.
- Then there are the fees paid to the government to record the legal documents: the condominium documents and Articles of Incorporation, in particular. As the local courthouse sets this rate based on the page count (among other factors), rates vary.
