Thinking Of “Condominiumizing” In Washington State?

As professional developers and ambitious property owners seek ways to profit from real estate, they will often look at options to convert lots with a single home into real estate that allows for the sale of multiple homes or multi-family developments. In other words, they try to create “more bang for their buck”, so to speak. Such entrepreneurial spirits have multiple options to accomplish their goals.

While subdivision certainly presents one way of creating and selling additional housing from a purchased lot (and often a desirable one!), sometimes the requirements for subdivision render the process overcomplicated or even impossible. Other times, a property owner wishes to build one or more Detached Accessory Dwelling Units (DADUs) and sell them off separately but cannot place each on a separate lot.

“Condominiumizing” provides another option for property developers and owners seeking to independently sell off more than one building that sits on a lot. While not a new concept by any means, establishing a condominium has emerged as a more popular option than ever with the rise of new changes in middle housing laws. To establish a condominium in a property development, a property owner must take several steps, chief among them being the following:

1. Working with the appropriate County or City department for purposes of permitting and land use. For example, in Seattle, a property owner would likely work with the Seattle Department of Construction and Inspections. This process is critical as the rules can vary widely between different jurisdictions, despite the middle housing laws affecting the entire state. Understanding how to comply with zoning and code requirements is essential.
2. Hiring a licensed surveyor. The condominium must have a survey map and plans recorded.
3. Hiring legal counsel to draft the governing documents of the community association to be established for the new development: i.e., CC&Rs, Articles of Incorporation, Bylaws, etc.
4. Forming and register the homeowner’s association with the Secretary of State as a nonprofit corporation.
5. Recording the CC&Rs and Survey Map and Plans with the applicable county auditor’s office where the property is located.
6. Working with applicable county assessor to ensure each property has its own tax parcel number.

While the process has more details and complexity than what I have outlined above (such as addressing utilities, easements, lending requirements, etc.), these constitute several of the major steps that a property owner must take to complete the task. With several moving pieces, a property owner must retain several experts in relevant fields, such as architects, contractors, surveyors, and lawyers, in order not to make serious errors. Nonetheless, with the right team and sufficient due diligence, creating a condominium can yield very positive results in some circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.