How to Convert a Multifamily Property to a Condo in Philadelphia

When multifamily property owners want to maximize the potential value of a property sale, they may consider converting a multi-unit building into condos. Fortunately, condominium conversions in Philadelphia are not too complicated nor difficult, and they take three to four months. Here is a set-by-step guide to the process.

What is a condo?

A condominium is a property that is shared by multiple owners where common areas and responsibilities are shared by a cooperative homeowners’ association (HOA). The building can also include commercial space leased or owned by businesses.

Where a multifamily apartment building is owned by a single person or entity and leases units to tenants who pay rent, in a condo each unit has its own owner. These owners may live in the units or they may lease them to tenants. Sometimes individual condos may be comprised of multiple units themselves.

In a condominium, the owner of an individual unit is responsible for all of the maintenance within the four walls of their unit, and the HOA as a whole is responsible for maintaining everything that the condos share in common. This may include everything from the roof, landscaping, and elevators to amenity areas like a gym, swimming pool, or a parking garage.

Condo owners usually pay monthly fees to the HOA to contribute to this maintenance, in addition to the standard mortgage, insurance, and taxes that most property owners pay.

For the owner of a multifamily property, converting apartments into condos becomes an attractive proposition because instead of selling the building as a single unit, they can sell each unit individually, maximizing profit.

Does my property have the right zoning to become a condo?

The first part of the process of converting an apartment building into a condominium is to determine whether this use is permitted under City code.

Condos are allowed either by right or by variance. By right means the zoning of the property already allows for the use, and getting a permit is a matter of applying. But if the use is not allowed by right, the applicant would need to apply for a variance, which would be more costly and complicated.

To become a condominium in Philadelphia, a property must be zoned for multifamily use under the zoning code. This includes properties with the residential multifamily (RM) or commercial mixed-use (CMX) zoning designations. Any other zoning designation requires a variance to create condos.

Obtaining a zoning variance for developing a condo or converting an existing building into condos requires substantial expense and legwork at the outset. Before investing time and money in applying for a variance, an owner should consult an experienced zoning attorney who practices in the City.

A knowledgeable lawyer will be an invaluable partner who can analyze the project, including the dynamics of the surrounding neighborhood, to assess its chances of winning. After all, some applications are stronger than others, and a zoning attorney with experience working with the City will advise against wasting time and money if the variance is unlikely. If the project has a good chance of success, the attorney will put together the strongest case for the variance, and provide critical advice throughout the process.

To seek a variance, the applicant would first apply with the Department of Licenses and Inspections. Once that application is rejected, the applicant would appeal to the Zoning Board of Adjustment. When considering the appeal, the City will look at the neighborhood and whether other, similar types of properties are there. They will try to determine the condo’s impact on the surrounding community.

The owner would need to meet with the local Registered Community Organization to gather input from the community — neighbor support is very important. The owner would then appear before the Zoning Board of Adjustment to present a case.

Once zoning is determined as by right, or a variance has been obtained, there is more work to do.

The step-by-step process of converting apartments into condos

Let’s take a hypothetical example to walk through this process: a four-unit property zoned RM-1. With this zoning, the property can qualify for condo-hood by right.

Now, even though the number of condo units will be the same as a rental property, the owner still needs to get new architectural plans. Why? Standard plans do not have sufficient information for condos. The new plans need to show what each unit owns within the building and what the HOA is responsible for.

For example, is there a basement that will be used for maintenance? Where are the washers and dryers located — in each unit or in a common area? What else will the HOA be responsible for — the roof, hallways, landscaping, snow removal? Someone, whether the condo owners or the HOA, needs to be responsible for every element of the building and its workings.

The property owner, attorney, and architect will work together to draw up these plans and create a condo declaration. With this document, the City of Philadelphia will create the condos. The Office of Property Assessment (OPA) will assign each individual unit its own OPA number. The property owner will be able to file a complete declaration of bylaws with the City and a realtor will draw up pricing sheets. Viola: Each individual unit can be sold on the real estate market.

It bears repeating that the condo conversion process in Philadelphia goes smoothly when the right — experienced and local — real estate attorney is involved. If you are interested in converting your multifamily property to condos, or have more questions about the process, reach out to me, Joe@ConsoleLegal.com, for more information.