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December 17, 2006
Want to Build a Condo? Where Do You Start?
This is kind of a craze in California, and a question sent to me recently: "I am currently purchasing property and hope to build a small condo complex (4 units) I don't know where to start. Can you point me in the right direction please?"
If it is not a condo conversion, its wanting to build a small condo building. Its a good investment, and the place to start is with an attorney who is familiar with condominium law in California, and who can write documents that will work. But that's not all. There are County and City requirements to consider, as any plans would have to be approved locally. And if the condo will contain more than 4 units, the subdivision plans and governing documents have to be approved by the Department of Real Estate (and that is probably why 4 or fewer is such a popular number).
Here are some ways to find knowledgeable attorneys: Call Community Associations Institute - your local Chapter - and get a directory that will list practitioners. You can find out your local chapter by going to caionline.org. And when you get a directory, start calling. Ask for references. Call your local Bar Association and get the name of real estate attorneys and start calling. Get references. Check the State Bar website for attorneys in the Common Interest Subdivision Section and start calling. Your local bar association may be able to refer you to a real estate attorney who does developer work via the reference panel. Each county bar association has a panel of attorneys listed working in various specialties. However, I have to warn that I sent a person who called me to the local panel in my county to ask for an attorney that represented homeowners in HOA law and the person was assigned to a law school classmate of mine that I did not consider to be very good in any field of law and especially not well versed in homeowner association law. Sometimes that happens. Cold calls are not as good as referrals, but these lists are available as a starting place. Your local planners may even know of attorneys that have worked with owners in similar circumstances that they found reasonable to work with.
One of the most important things, though, is to get good documents written. When there are an equal number of units in a condo association one of the toughest things that I see happen is that the ownership goes to people who cannot seem to get along, and then they end up disagreeing on important decisions with an even number for and against. And there is no reasonable way written into the documents for resolving differences. So give some thought as to how the owners can work together to make important financial decisions, as their asset will be inextricably intertwined, unless each unit is of separate construction, and their conduct will be under closer scrutiny than most "over-the-fence" neighbors.
Posted by Beth Grimm at December 17, 2006 8:04 PM