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Condominium Conversion from Apartments

Written by: on April 29, 2019 | Category: Blog | Tags:

Understanding the Condominium Conversion Process

Many landowners who own apartments become tired of the daily, weekly, and monthly grind of maintaining and servicing these properties.  While there is both profit and a sense of fulfillment in providing housing to people, it is a time-consuming and expensive process.  Because of this, many apartment owners have contacted me over the years about converting their apartments into condominiums.

While there are unquestionable benefits in such a conversion (such as the profit in the sale of the individual units, the divestiture of parts of ownership, and the lowered need for maintenance on an owner’s part), it is important that every property owner understands that the process in converting a condominium to an apartment is not a simple task, and the additional issues that arise from such conversion can be time consuming.

Initially, every owner should know that there are statutory requirements imposed on them before they can lawfully convert an apartment to a condominium by the Pennsylvania Uniform Condominium Act (the “UCA”).  Additionally, beyond the normal steps in setting up a condominium which themselves are quite involved (preparing the land use and municipal elements, creating and recording a Declaration, creating the Covenants, Conditions and Restrictions, creating a managing entity, preparing documentation about what elements will be “common elements” and what will be owned by the individual Unit Owners, and the Public Offering Statement), the UCA requires additional steps that must be taken when converting an apartment to a condominium.

The most important aspect of the conversion, as compared to the creation of a traditional condominium, is the “Conversion Notice”.  The notice must provide the date of the conversion (the “Conversion Notice Date”).  According to the UCA, the declarant contemplating the conversion is required to provide a Conversion Notice no later than one year before the declarant will require any residential tenant and residential subtenant to vacate.  Moreover, for six months after the Conversion Notice Date, the offer of purchase must be exclusive to the tenant. Even after that six month period, the declarant may not offer to dispose of an interest in that unit during the following next six months at a price or on terms more favorable than the price or terms offered to the tenant.

Other requirements under the UCA include:

  • Tenants who are disabled, or are over the age of 62, and who have occupied the leased space for more than two years, must be granted a two-year period to vacate the converted premises.
  • A tenant’s meeting must be held at least 30 days before the Conversion Notice Date and be open to the public in the municipality where the proposed conversion building is located. At least 10 days’ notice of the meeting must be given to the tenants.
  • The Public Offering made in connection with the conversion must contain additional information.

These additional steps are critical to any property owner contemplating conversion as they can significantly impact the owner’s timetable due to these notice requirements. It is important that any owner contemplating this type of conversion be aware of these potential pitfalls in converting apartments to condominiums.

Attorney Jason A. Ulrich counsels property owners in various commercial and residential real estate issues including lease agreements and evictions as well as more complex matters involving land acquisition and zoning, construction matters, condominium conversions, and more.

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