Condominium Conversions and Condominium Documents Specialists MSH Architecture Associates

 

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Converting Properties to Condominiums is no Simple Matter

The creation of a condominium, either through new construction or, as is more frequent, through the division of an existing property into multiple units, requires the expert assistance of an architect well versed in the field of condominium conversion. Whether a property is divided into condominium units as is, improved cosmetically, or undergoes a serious make over, condominium document drawings prepared by the architect are a critical ingredient to a successful sale of the units. These drawings are as-built plans that are required for the conveyance of the units and for filing with the Registry of Deeds. These drawings must follow the Registry’s strict guidelines and must be fully coordinated with the documents prepared by an experienced attorney.

Each state has detailed requirements regarding the content and appearance of the Master Deed Plans and Unit Deed Plans to be filed in its Registries of Deeds. Most important, the documents must delineate clearly the bounds of ownership for each of the condominium units. Exclusive use areas must be noted clearly, as well as common areas that are decided upon jointly between the owner of the property undertaking the condominium construction or conversion and the owner’s attorney.

In Massachusetts, the Master Deed Plans and Unit Deed Plans must conform to requirements regarding the size of the lettering, border size, sheet size, and the size of the area set aside for the Registry’s certification. The quality of the mylar or linen material used for the Master Deed Plan and the stability of the ink used on the material are often carefully reviewed by the Registry. The Master Deed Plan and Unit Deed Plans also need to be signed and stamped by the professional preparing the plans. In other states, the Master Deed Plans and Unit Deed Plans must meet the requirements of their respective Registries. Because of these detailed requirements, working with an experienced architect who deals regularly with the specifics of condominium documents is crucial to assuring conveyance of clear title to the units and to help facilitate closing of the sale smoothly and on schedule. 

Converting properties to condominiums is no simple matter. The process can be filled with foreseen or unforeseen opportunities and challenges. As investors or property owners assess whether to convert their property to individual units, the valuation of the property as individual parts versus the value of the whole is a critical piece of the equation. At first glance, it may appear easy or obvious, but those who have been through the process know that unforeseen expenses and time delays can always arise in the process of conversion.  Nevertheless, care and attention to the cost of improvements and their expected addition to the property value can result in the parts having a greater value than the original whole. 

The key decision involves analyzing what type of improvements should go into the property for an optimal return. This determination turns out to be a cost-benefit analysis that depends on the condition of the property, its location, and market forces.  The simplest route is for the architect to draw up existing (“as built”) plans of the property so that, if the owner chooses to take this route,  the units can be conveyed as is. This path may be the safest way to obtain a quick profit from a property. The architect can provide additional important services to property owners contemplating a condominium conversion by helping to determine the suitability, or readiness, of the property for conversion. In addition, the attorney must carefully note any easements and take them into account in the process of condominium conversion, because they may affect the documents and/or the feasibility of the conversion as well. 

More often, however, the existing property will require some improvements. The architect can assist the owner to determine what scope of improvements will still yield a profit by creating individual units of a higher quality. Architects can provide minor – or sometimes extensive – remodeling plans to optimize the salability of the units, including designing layouts for the units and optimizing square footage for the conveyance of the units.  These kinds of improvements have to be done selectively; in each case, the property owner and architect must determine an appropriate amount of improvements so as not to turn an attempted transformation into a lengthy and costly construction project. However, significant improvement can be made with modest but strategic modifications to multi-family properties, including two- and three-family properties. Examples of such improvements include attic remodeling and opening up the living areas to achieve an open and spacious feel to the units.  Combining the basement level with the ground floor unit or at least deeding some of the area for future expansion is another cost-effective improvement that often yields increased values with minimum risk.

If construction improvements to the property are required, the architect will also prepare construction drawings for the building department and the contractor. The architect can then efficiently supply owners with the detailed drawings necessary to expedite the process from design concept through the as-built drawings needed to file with the Registry.

 Marc Hershman, principal, MSH Architecture, Newton,  MA  EXPERTS CONDO CONVERSION

 MASSACHUSETTS COMMERCIAL REAL ESTATE RESOURCE GUIDE 2006/2007