What is a Condominium Conversion?
Condominium Conversion is the process whereby a singular residential or commercial property is transformed and entitled into multiple, individual condo units. The buyers of these condo units are said to be Unit Owners and are governed by a Condominium Regime or Association.
Why do a Condominium Conversion?
Condominium Conversions allows for real estate developers to increase the density of a property in order to provide new housing accommodation options within their respective urban communities. This presents investors with a potential for a profitable investment, while creating new home ownership opportunities for families and first time home-buyers.
How to do a Condominium Conversion?
Condominium Conversions are entitled through an approval process regulated by the local municipal government / authority. In Washington DC, the condo conversion process is governed by The Rental Conversion and Sale Division (CASD) within Department of Housing and Community Development (DHCD) and as constituted by The Rental Housing Conversion and Sale Act of 1980, as amended (D.C. Law 3-86) (the Conversion Act) and The Condominium Act of 1976 Technical and Clarifying Amendment Act, as amended (D.C. Law 9-82) (the Condominium Act).
3-Step Condo Conversion Process in DC
STEP 1 - Eligibility to Convert
An "Eligibility to Convert" application must first be submitted to Department of Housing and Community Development (DHCD) for all condominium conversions in Washington DC. Based on the previous occupation circumstances of a vacant property, the application is either categorized as a "Not a Housing Accommodation Exemption" (NHA) or a "Vacancy Exemption" (VE). If the subject property is to remain tenanted, the Owner must request for a "Tenant Election to Convert." DHCD will award a Certificate of Eligibility to Convert to approved applications, which provides the green light to continue the conversion process in the District and start forming the Public Offering Statement
STEP 2 - PUBLIC OFFERING STATEMENT
The Public Offering Statement (POS) must next be submitted to DHCD for review and approval. The POS consists of two parts, a narrative portion and an exhibit portion. The narrative portion is intended to summarize significant features of the condominium and also to present other information of interest to the prospective purchaser. The exhibits include legal documents that are required for the operation of the condominium association. Should the submitted Public Offering Statement be deemed compliant with Chapter 19 of the Code of the District of Columbia, DHCD will issue a Condominium Registration Order. The owner of the newly established condominium regime may now take sales contracts on individual units.
STEP 3 - DCRA RECORDATION
The final step of the condominium process in DC takes place in The Department of Consumer and Regulatory Affairs (DCRA). The Declaration and Bylaw exhibits of the approved Public Offering Statement must be recorded with DCRA's Recorder of Deeds for public record. Furthermore, the Condominium Plat and Plan Survey must recorded with DCRA's Office of the Surveyor. Finally, DCRA's Office of Tax and Revenue will attribute new condominium tax lot numbers to each individual Condominium Unit and Parking Unit. The owner of the Property may now sell his/her ownership of the Condominium Association as desperately deeded units.
FAQ for DC Condo Conversions
WHAT IS INCLUDED IN THE PUBLIC OFFERING STATEMENT?
The primary exhibits to the Public Offering Statement include the following:
- Declaration & Bylaws (commonly referred to as "Condo Documents")
- Condominium Plat & Plan Survey
- Architect’s Report
- Limited Warranty
- Construction Budget
- Condominium Association Budget
- Purchase Agreement
HOW LONG DOES THE CONVERSION PROCESS TAKE?
The condominium conversion duration is case by case, but typically ranges from 4 - 5 months. 2 months of this time is used by DHCD to review the Public Offering Statement submission, per § 42–1904.06 of the Code of District of Columbia. The condo conversion process can be conducted concurrent with construction and permitting process of the property. In order to prevent delays, we encourage you to initiate the condominium conversion process as early as the initial acquisition of the property.
HOW MUCH DOES THE CONVERSION FILING COST?
As a summary and approximation, DC filing costs (not including legal and developer's consultants) will amount to:
- $100 per Condo and Parking Units DHCD Fees
- $200 Condo Document Redecoration Fee
- $500 Plat and Plan Redecoration Fee
WHAT IS A CONVERSION FEE? WHAT ARE THE EXEMPTIONS?
Department of Housing and Community Development charges a condominium Conversion Fee equivalent to 5% of each Unit sales figure, made payable within 30 business days from the date of settlement, per § 42–3402.04 of the Code of District of Columbia. The following are some of the main exemptions to the Conversion Fee:
- Conversions that are granted a "Not a Housing Accommodation Exemption," which means the Property was previously solely owner occupied or registered vacant for at least 12 months.
- Sold to low-income household (>80% of area median income)
- Sold to senior person (62+ years of age)
- Sold to disabled person (as defined by ADA)
- Sold to tenant who lived in Property for at least 12 months prior to its conversion to condominium
WHAT WARRANTY DO I NEED TO PROVIDE FOR A CONDO CONVERSION?
Department of Housing and Community Development mandates that a Warranty must be provided against any potential "structural defects" of all Units and common areas conveyed in a condominium conversion, per § 42–1903.16 of the Code of District of Columbia. 10% of the estimated construction (material & labor) costs of the conversion project must be held by the District for 2 years from the date each Unit is sold. This warranty amount can be made payable as a form of a bond, letter of credit, or any other form of security the District shall approve. If there are no claims to this Warranty within the two years, the funds will be fully dispersed back.
HOW CAN I START ON MY DC CONDO CONVERSION PROJECT TODAY?
To set up a free consultation for a condominium conversion in the District, please reach out to us.
We have over 15 years converting 100+ condominium properties in the District, ranging from 2-unit row home conversions to complex multifamily and mixed-use, commercial properties. Our current pipeline of 50+ condo conversion projects are in collaboration with novice, first-time investors to seasoned and experienced developers. If you are looking to acquire a DC property or already own one, and wish to convert into a condominium, email us at firstname.lastname@example.org or give us a call at (202) 888-0132.