Maui and the entire state of Hawaii is one of the most desirable places to live in the US. Unfortunately, It’s also one of the smallest. Housing is at a premium, so property owners find ways to create more housing and if possible, make it affordable. Condominiumization is a method of dividing a parcel into a condominium property regime (CPR) allowing independent ownership of each area section or “condo”. While a CPR will allow you to sell off sections of your parcel or lot, with or without buildings, it does not change the zoning or permitted uses of that parcel or lot.
When most people hear the word “condominium,” they usually think of an apartment-type unit in a multi-family building purchased as a home or as a rental property. But in this context, the term “condominium” is associated with this type of ownership, rather than an individual property.
Going Condo
In everyday talk when folks talk about a “condo” or condominium, they are thinking about a condo as a single unit within a larger building where you have neighbors above, below, and next to you. In Hawaii, multiple residences can be one place, on one property. They may even be inside of a house, with multiple owners who share common elements such as hallways, recreation areas, lobbies, and the roof.
For instance, if someone buys a property that has a main house and two accessory dwelling units, or ohanas, the owner can sell them to others who will then have their own homes.
What a property owner can do is buy a property, then sell pieces of it to new owners. This can help pay for the land and/or property, or even pay it off entirely.
This is different from a subdivision. First, a subdivision requires individual water meters for each unit, whereas a condo situation may not. Second, there are no minimum square footage areas for condos as there are for subdivision lots. Third, many potential issues with joint ownership can be avoided.
Condominium Property Regimes (CPR)
Real estate listings on The Valley Isle may include CPR in their descriptions. Condominium Property Regimes, or CPR, is the legal mechanism by which property owners can create a condominium and sell it. They are similar to duplexes, triplexes, and fourplexes on the Mainland, but each unit is individually owned.
The land is owned collectively by all the condo owners, but some features may be individually owned, such as a backyard.
Different properties may have common elements, such as sidewalks, driveways, etc., used by all owners, or limited common elements, such as the aforementioned yard area. The condo documents should delineate the entitlements that are available to each unit.
Should You Condominiumize?
Home and property owners can recognize significant financial benefits from condominiumizing their property.
There are several good reasons to consider going condo:
• Buying a CPR unit offers buyers a more affordable housing option.
• Creating a CPR allows an owner to split property for family members, to sell, or for tenants in common.
• The CPR process creates equity with the sale of the units minus the CPR costs, and the entire property has a higher value.
• The process for CPR is faster than for subdivisions, and typically doesn’t need the improvements necessary to create one.
There are also some downsides to condominiumization and creating a CPR:
• Vacant land condominiumzations could run into issues if one owner’s plan impacts the plans of other owners, inhibiting their ability to build on their own sector. For instance, if the owners share a water meter, and one adds more plumbing fixtures than anticipated, the next one to build may be limited in the number of plumbing fixtures they can have.
• Building or zoning violations could be attributed to the entire property, not just the individual unit
• If you decide to keep the additional units, taxes could increase, especially if you have a homeowner tax assessment.
• You will have long-term relationships with the other unit owners, so choose carefully.
Condominiumization is a great way to expand the availability of housing in Maui and help pay for your own property. We’re very familiar with the process and are happy to discuss it with you.
Condominiumization? Call Pro Draft Today
If you are thinking about the process of condominiumization in Maui, Pro Draft is ready to help with architecture, drawings, blueprints, and permits, and to answer all of your questions. We work with property owners throughout Maui who decide to subdivide and begin their Condominium Property Regime. We understand the process and what’s involved so we can help make it easier for you.
Call Pro Draft today at (808) 579-9050 or 1-800-499-4699 from the Mainland.
