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What are some issues that can arise in a condominium conversion?

As greater Boston communities continue to grow and develop, urban planners may have an eye toward converting older warehouses or buildings. 

In a recent example, a three-level East Boston firehouse constructed in 1860 was converted into two luxury condos. Given the building's original purpose, the dimensions of the first floor are vast and include industrial touches like metal air vents. Even the third floor ceilings are about 15 feet high. As might be expected, the developer had to take a keen eye toward refurbishing, such as installing adequate heating and floorings.

Although repurposing abandoned structures and revitalizing downtown areas is a laudable effort, a real estate attorney knows that many complicated issues can arise. In a worst-case scenario, a developer may have to defend against a condominium conversion claim for negligence, arising from any number of disputes.

For example, a condo conversion means that a new association will be formed. Massachusetts state law imposes certain requirements for how a condo association can operate, as well as the tax implications to each individual condo unit owner. An association generally must have some funding or strategy for responding to daily maintenance and repair responsibilities, as well as operating expenses. In a sense, a condo conversion should also promote a plan for how the new entity will be funded and operate. That, in turn, may involve numerous real estate documents and disclosures.

An attorney that focuses on real estate sales and investments can provide assistance to a developer seeking to do a condo conversion. From zoning to financing and tax implications, an attorney can review a proposed transaction as part of his or her due diligence. Hopefully, a proactive approach will make a condo conversion go that much smoother. 

Source: City of Boston, "Condo Conversion & Tax Bills"

Source: Boston Globe, "Converted firehouse in East Boston," John R. Ellement, Oct. 26, 2014

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