Condominium Conversion FAQ
This document is provided for your information. It does not constitute legal advice from Sigman Law Office, P.C. to you. Legal advice is provided only after an engagement letter is signed by you and us. Q. A. What is a condominium? A condominium is a form of ownership that allows multiple owners to live in the same building or buildings while retaining an ownership interest in the property. Each unit owner owns a unit in the building and holds a certain percentage interest in the common areas and facilities of the property. The owners maintain the common areas together in an entity (usually a trust) which is more commonly referred to as the unit owners’ association. Each unit is separately taxed as if it is a parcel of land. What documents are needed to create a condominium? Under Massachusetts General Laws Chapter 183A, a landowner who wishes to create a condominium must record a master deed, declaration of trust or other document creating a condominium association, and an as-built plan showing the exact layout of the condominium “as built”. What is a master deed? The master deed is a document that conveys the property to a managing entity and submits it to the laws of c. 183A. It contains descriptions of the land, the building and the units. It creates any easements for parking or other uses and places restrictions on the use of the units. What is the Declaration of Trust? M.G.L. c. 183A requires the recording of a document creating a condominium association. This is commonly a trust. The document sets forth the requirements of the trustees, the bylaws and rules and regulations of the condominium association What are the as built plans? The as built plans show the condominium as it is built. Therefore you cannot create a condominium until the building is complete and an architect, surveyor or engineer creates a drawing. The plans must bear the certification of a registered professional. This is not a service that Sigman Law Office provides. However, we have several surveyors that we can refer you to. If your conversion is going to be delayed, this is probably the reason for the delay. Make sure that you get the plans to us as soon as possible.
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If I own a condominium unit, what do I actually own? You own from the walls of your unit inward and the utility lines servicing your unit (wires, pipes, heating ducts, etc.). Sometimes, a unit will have a parking space, storage unit, porch, deck, patio, etc. This is actually not part of the unit; you own an exclusive easement (right to use). What are the common areas? Generally, common areas include: hallways between units, doorways, the roof, the exterior of the building, the land upon which the building is located, the space between the interior and exterior walls, and any driveways or parking areas. It is the sole responsibility of the condominium unit owners’ association to maintain and repair these areas. For example, if the roof leaks, the condominium association will have to pay for the repairs. How is the percentage interest determined? Percentage interest is determined by dividing the initial market value of your property by the market value of the entire condominium project. The asking price for a condominium is often used to calculate this because it is based upon the square footage of the unit. Your percentage interest determines how much responsibility you have for the condominium fees, taxes, insurance and any other common charges. The percentage interest does not change unless the square footage of the unit is expanded. What is a condominium fee? A condominium fee is a fee based on the annual operating budget of the condominium. Each unit owner pays a certain percentage of the budget based upon their percent ownership in the condominium. Although the percentage interest will likely always remains the same, the condominium budget tends to fluctuate over the life of the condominium and therefore your condominium fee may increase. Reasons for increases are special assessments for large repairs or construction of the common areas, inflation, and increases in insurance premiums. What items are generally included in the condominium budget? Generally, the budget includes the master insurance premium, water/sewer, common utilities, taxes (for the first year of the condominium project only), maintenance fees for common areas, snow removal, landscaping, etc. The budget will also include a capital reserve that the association can tap into for major repairs. What if I do not pay my condominium fees?
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Your condominium fee is the basic building block of the condominium association. Without the fee, the condominium cannot persist. Many condominium associations will charge late fees for late condo fees. You cannot sell a condominium without paying all of your condominium fees. Back condo fees will become a lien on your property and under Massachusetts Law this lien is senior to your mortgage! If necessary, your bank will pay the condo fees for you and then go after you for reimbursement. What is meant by deeded parking? Does that mean I own the parking space? No. It is a common misconception that when you have a parking space deeded to you that you actually own the piece of asphalt. In reality, you own the exclusive right to use the parking space. In most cases you can freely buy and sell this right. In some cases you are responsible for clearing the space of snow and ice and maintaining its condition. In others, the condominium association takes care of the parking space. I have tenants in the units in my multifamily. Do I need to give them any notice that I am converting to condominiums? Yes. In 1983, Massachusetts enacted some legislation requiring owners of buildings with 4 or more units provide their tenants with at least one year’s notice and a right of first refusal when converting those units to condominiums. Some cities and towns (such as Somerville) require this notice or at least a signed waiver by the tenants prior to conversion. It is good practice (given the uncertainty in this area of the law) to obtain written waivers from each tenant, regardless of the size of the building, when converting units to condominiums. I have tenants in one unit and I am trying to convert the building into condominiums. The tenants refuse to leave prior to the expiration of their lease. Should I evict them? You should never try to evict a person from their apartment in order to sell a unit. This will likely come back to haunt you. It is extremely difficult and expensive to evict a person from their apartment. You should wait until the natural termination of their lease and simply not renew it.
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