Combining Two Condominium Units
Question: I currently own a one-bedroom condominium unit. My next door neighbor has offered to sell me his unit, so that the two units could be combined into one larger unit. In all likelihood, I will initially move into the new unit as my primary residence and rent out the one in which I presently live. However, in the future, I plan to make improvements and do construction so as to make them into one large unit.
When the two units are combined, will I have to record the lot or title change with the recorders office? Will I have to refinance my two mortgages into one loan? And will I be allowed to break through the wall between the two units without having to refinance?
There is a possibility that after combining the two units, I may want to separate them at a later date and sell each one separately. What will this require?
Answer: This is a common situation. However, there are two different scenarios. The first is what you have proposed — namely just merging the two units together. A second approach is where the two units are reconfigured, so that one unit becomes larger and the other gets smaller.
Let’s look at each situation:
Merging of two units: here, you will own two units. For all practical — and legal — purposes, they will continue to stay as two separate units. You will continue to pay two separate mortgages, pay two separate real estate tax bills, and two separate condominium fees. You will vote the percentage interest for both units on association matters. The only title change will be when you purchase the unit from your neighbor, since title will then go into your name when you go to settlement.
If you decide to break down a wall and do some major (or minor) construction, you will have to get the approval of your association. Most associations impose conditions on the renovation, such as requiring that you use licensed contractors, that you have adequate insurance in place, and that the work is done only during specified hours during the day.
But even after you have cut through the dividing wall and made one large unit, they are still two separate units.
You can legally merge the two units into one, but that would require a lot of work, money and time — and in my opinion, does not make sense. In order to create one unit out of two, you need approval from your association, your plats and plans must be revised and recorded with the official surveyors office, and a condominium amendment to the legal documents will have to be recorded in the land records where your property is located.
You have indicated that at some point in the future, you may want to separate the units, so that you can sell them individually. Obviously, you will have to replace the dividing wall, but once that has been accomplished, you still have two separate units. You have not changed the legal structure, and thus each unit retains its separate identity for all purposes.
Relocation of Boundaries: here, we have an entirely different situation. You want to purchase the unit next door, break down the dividing wall, and make one of the units larger.
The first thing you have to do is confirm that your legal documents — Declaration and Bylaws — will permit such a relocation. Assuming that this is not a problem, then you will need the approval of your Board of Directors.
Prepare a plan — usually through architectural drawings — and formally submit them to your Board of Directors. Most Bylaws require that the Board must act on an architectural proposal within a set number of days, or the plan will be “deemed to have been approved”.
Since you clearly will be doing renovation, your plans should spell out what work will be done, when it will be done, and who will do this work. As indicated earlier, most associations require that you use licensed contractors for the work — especially if you will be doing electrical or plumbing installations.
In addition to obtaining Board approval for your plans, you will have to arrange for a revision to the existing Plats and Plans. Look in your legal documents; you should see a document which contains drawings depicting the location of all of the units in your complex. These are referred to as “Plats and Plans” and they have been recorded officially with the local government office of the surveyor or in land records.
The Plats and Plans are important documents. Often, there is confusion as to what is — and what is not — a common element, a limited common element or even a unit in the condominium complex. Generally, the Plats and Plans — if drafted properly and carefully by the developer — will show these areas.
The existing Plans for your building will show two separate units; since you now want to reconfigure these units, a new Plan must be prepared and formally filed.
Additionally, you will want to advise the local real estate taxing authority of these changes. Clearly, if you decide to sell the smaller unit, your purchaser does not want to pay the real estate taxes on what used to be a larger unit.
Changing the boundaries of condominium units is not impossible — but there are a number of architectural and legal steps which must be taken. You should seek competent professional advice before you undertake such a project.
Written by Benny L. Kass for www.RealtyTimes.com Copyright © 2015 Realty Times All Rights Reserved.