Conversion from Condo community to Townhouse community

We are a small four building 8 unit (almost duplex looking but function as single family residences) community. Our CCR's indicate we are a condominium and our Board has operated as such.

It has come to our attention that when one of our unit sells, the marketing comparable must be condo units rather that townhouse units. We believe nearby townhouse units sell for considerably more per sq foot than condo units, making our units less valuable.

My question is:

If all of our unit holders are willing, is it possible to convert from a condominium community to a townhouse community? How difficult would that be? What would be the steps and what professionals would need to be involved?

Thanks

What is the legal distinction between a condo and a townhouse?

In my state there is no explicit mention in the statutes for a townhouse. The definition for a condo is:
"Condominium" means real estate, portions of which are designated for separate ownership and the remainder of which is designated for common ownership solely by the owners of the separate portions. Real estate is not a condominium unless the undivided interests in the common elements are vested in the unit owners. ARS 33-1202(10).

This is also a tax issue. Our state doesn't distinquish Townhouses from Single homes. However, condos are categorized separately. That is because townhouses are set up differently than most condos. Townhouse/Patio Homes typically each owner had access to land. Condo's they share floors/walls so a 2nd story and above person would not have "land" outside their door. That's the best way I can describe the difference.

Home values are based on REALY numbers. That means that home values are based on what similar homes sale/foreclosed for in a few mile radius. Townhomes may be 2 bedroom/2 bath just like your condos. However, condo's and townhouses can sell at different prices for a variety of reasons. They are not necessarily "apple and oranges". The Townhouses may have amenities your condo's don't have. They may be a bigger square footage.

You may want to look into the other factors that make the sales different. Talk to a realtor to find out where they get their comps for sales. That may shed some light before you try to do a conversion.

But we don't necessarily know the differences. In your state and circumstances, what are the differences between a condo and your proposed TOA?

Clearly our CCR's define us as a condominium.

As we understand it, condo owners own no land directly--just "inside the walls". In a townhouse, the unit holders own from "land to sky" (I.e>, their parcel of land is deeded to them individually.)

Mark,

Town homes are either in an HOA or a COA. There is no TOA.

My town home is in an HOA. The individual homes in the row have staggered heights and setbacks so each town home is indeed one complete home. We own the land the home sits on and the land of our front and enclosed rear yards. Each owner is responsible for all interior and exterior repairs to their home. The party walls between homes are addressed in our CC&Rs. Basically, they are an issue between the two owners who share the wall. The Association does not get involved with those issues.

Here is the actual language from our CC&Rs:

PARTY WALLS

Section 1 General Rules of Law to Apply: Each wall which is built as a part of the original construction of the homes upon the properties and placed on the dividing line between the Lots shall constitute a party wall, and, to the extent not inconsistent with the provisions of the Article, the general rules of law regarding party walls and liability for property damage due to negligence or willful acts shall apply thereto.

Section 2 Sharing of Repair and Maintenance: The cost of reasonable repair and maintenance of a party wall shall be shared by the owners who make use of the wall in proportion to such use.

Section 3 Destruction by Fire or other Casualty: If a party wall is destroyed or damaged by fire or other casualty, any owner who has used the wall may restore it, and if the owners thereafter make use of the wall, they shall contribute to the cost of restoration thereof in proportion to such use without prejudice, however, to the right of any such owners to call for a larger contribution from the owners under any rule of law regarding liability for negligent or willful acts or omissions.

Section 4 Weatherproofing: Notwithstanding any other provision of this Article, an owner who by his negligent or willful act causes the party wall to be exposed to the elements shall bear the whole cost of furnishing the necessary protection against such elements.

Section 5 Right to Contribution Runs with Land: The right of any owner to contribution form any other owner under this Article shall be appurtenant to the land and shall pass to such owner’s successors in title.

Section 6 Arbitration: In the event of any dispute arising concerning a party wall, or under the provisions of this Article, each party shall choose one arbitrator and such arbitrators shall choose one additional arbitrator, and the decision shall be by a majority of all arbitrators.

Dale

There was recently a conversation about townhouses and if I recall there was a difference between Tim's present situation and one of my past situations.

It was concerning a fenced in backyard that in Tim's situation, the townhouse owner was responsible to maintain and the standards could very. I do not recall the ownership situation. I had said that in my last townhouse situation the owners could do nothing outside the exterior walls, not even plant a bush. My point is two different situations possibly existed and both were classified as "townhouses".

Since there are only 8 owners, you could probably - with proper legal assistance - arrange a series of agreements and contracts where by the present association is dissolved and a new one formed to take its place. The new one would be organized as whatever kind of association you wanted as long as the state's requirements are met.

These agreements would need 100% of all the owners to consent to the changes, and maybe their mortgagees as well. But with only 8 owners it should be fairly simple as long as everyone is in agreement.

Doing this may also depend on the legal definition of HOA vs COA vs TOA in your state. In Florida, for instance, there is no such thing as a TOA.

DaleE (N Carolina)

1 - Take a look at North Carolina Statutes ch 47C ( "condominium") and 47F ("planned communities") http://communityassociations.net/resources/state-laws/

Do your owners' skillsets & expected benefits justify an 80 % owner consented Termination under ch 47C article 2, s 47-C-2-118 Termination of Condominium ?

Followed (or not) by possibly the creation of a "planned community" under GS 47F-2-101 or something else ?

Wonder what mortgagees would think about such conversion ? Would they yank financing ?

2- These "What-If" scenarios are often kicked around.

But (dubious ?) possible benefits are often found to be FAR FAR outweighed by the costs & legal upheavals.

The way the question is asked upfront, can be a good indicator how well the complex conversions might be understood & handled if attempted IF other than by professionals.

3 Statutory regimes like genuine "condominiums" get a legislated framework. Without a formal HOA law or comparable formal legislative framework, HOAs may be simply strings of contracted contractual promises CCRs on title, that may or may NOT successfully bind transferees.

Check out some Other postings here about HOA-like communities.

Shared roofs/building envelopes/building systems/amenities are trouble outside the condo or formal HOA universe.

Good luck with your homework. Acquired or hired professional competence will be needed for such a complex change; would benefits be worth those ?