|Condominium Conversion Top 10 Questions
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By Rosemarie MacGuiness and Andy Sirkin
As of June 11, 2013, there is new condominium conversion law in San Francisco, and some of the information in this article may no longer be accurate. For the latest information, see the article entitled New TIC Condo Conversion Law.
What does condominium conversion cost?
The typical cost for a conversion, excluding possible building repairs (as discussed below), is $20,000 for a 2-4 unit building and $28,000 for a 5-6 unit building. Here is an itemized summary:
$9,478 for 2-4 units
$9,593 for 5-6 units
$5,000 avg. for 2-4 unit building
$7,000 avg. for 5-6 unit building
$2,346 avg. for 2-4 unit building
$2,700 avg. for 5-6 unit building
no charge for 2-4 unit building
$4,000 avg. for 5-6 unit building
$2,800-3,000 for 2-4 unit building
$5,000 for 5-6 unit building
not required for 2-4 unit building
$1,700 for 5-6 unit building
$150 for 2-4 unit building
$300 for 5-6 unit building
Depending on the date the conversion is approved, you may also have to prepay up to 18 months of property tax.
Will I need to bring my building up to current Building Code? Will I need to make repairs or improvements?
You do not need to meet modern Building Code standards to convert, but most buildings will require some repairs and alterations. The official requirements are to (i) eliminate or legalize work that has been done without proper building permits, and (ii) correct health and safety hazards. Unfortunately, these requirements are somewhat vague, and each building inspector has his/her own interpretation. If your building is in more or less original condition (even if it is quite old), and the improvements and repairs made over the years were completed with building permits and final inspection, you are not likely to have much work to do for conversion. On the other hand, if there has been a kitchen or bath remodel without permits, illegal deck or stair construction, or a non-permitted attic or basement room added, you will probably face a costly compliance procedure even if the work was done to Code. Fortunately, since the illegal work will have been discovered through an inspection you request, you will not be fined or penalized; but if the illegal work cannot be legalized because, for example, it violates Planning or Fire Code requirements, your only option may be to demolish it.
What is a pre-conversion inspection? Should I get one?
In a pre-conversion inspection, a private company recommends what you should do to prepare for the City building inspection in order to minimize the cost of conversion-related work. We only suggest a pre-conversion inspection for buildings where a significant amount of work has been completed without building permits.
Will I need to separate the utilities?
Each unit must have its own electric meter, and there must also be a separate electric meter for the common area. Gas meters and water meters do not need to be separated.
How long does conversion take?
The City is currently processing conversion applications in 2-4 months. But many owners do not complete their building repairs within this time frame, and conversion cannot be completed until all the repair work has been inspected and approved.
How should I begin the conversion process?
Step 1: Schedule a meeting with us in your home or our office. We will explain the process free of charge.
Step 2: Apply for your building inspection. We have the form on our website or can send it by fax or email.
Step 3: Hire a land surveyor. We can fax or email a list of recommended surveyors.
What are the roles of the various professionals who will assist me in the condo conversion?
Land Surveyor: Prepares the map submitted to the City and diagrams showing who will own what parts of the property.
Title company: Issues a title report for the City, records the condo documents, and processes sale/refinance.
Lawyer: Prepares and monitors City conversion application, prepares condominium documents (CC&Rs and bylaws), provides advice.
How can I expedite the conversion process?
No matter what other firms might imply, the reality is that conversion applications are processed in the order submitted. But applications move more slowly when the City’s application checkers are busier, and they are delayed when something is missing or improperly prepared. So, conversions can be expedited by (i) getting the application in as early as possible following the condo lottery, (ii) making sure everything in the application packet is complete and properly prepared, (iii) monitoring the application to make sure it is not “stuck”, and (iv) responding to City requests immediately and clearly. It helps to hire an attorney and a surveyor who the City processors know personally and feel comfortable calling or emailing (rather than writing and mailing a letter) if a problem arises.
Do I need to refinance after conversion?
You do not need to refinance after conversion, but you will not be able to own or finance the condominiums separately until you do. This means that, until you refinance, the City will consider the building to be condominiums, but your ownership and loan situation will be the same as it was before conversion.
Will conversion raise my property tax?
No. After conversion, each condominium will have its own assessed value and its own bill, but the total tax owed on by all the condos combined will be the same as the building tax was before the conversion.
What are CC&Rs and why do I need them?
The Declaration of Covenants, Conditions and Restrictions, or CC&Rs, describe the rights and duties of the condominium owners. State law requires that all condominium properties have CC&Rs recorded in the County Records, but recording CC&Rs can be delayed until you are ready to refinance or sell. Much of the format and content of CC&Rs is dictated by state law, and that is why a TIC Agreement cannot be used as CC&Rs; however, where the converting owners have a TIC Agreement, all of the important parts of that agreement are included in the CC&Rs unless the owners agree to change them.
What if I have other questions or an unusual situation?
We would be delighted to help. Email or call Cam at email@example.com and 839-6407; Rosemarie at firstname.lastname@example.org and 839-6406; or Andy at email@example.com and 462-5925. We look forward to speaking with you soon.
Why choose Sirkin & Associates to handle your condominium conversion?
• We Get Your Conversion Approved Quickly. Our application packages are complete and properly organized the first time. We have a full-time paralegal, Cam Perridge, dedicated to monitoring your approval and pushing it through the process.
• We Provide The Best Client Service. Our dedication to personalized service and accessibility is unparalleled. No other conversion firm provides a dedicated staff member to answer phone calls and emails immediately for the duration of the conversion, and no other conversion firm provides meetings at your home. Attorneys Andy Sirkin and Rosemarie MacGuinness each have direct-dial telephone numbers and are also committed to being available when you call and responding to your emails immediately.
• Our Documents Are Easy To Understand and Avoid Owner Disputes. Your CC&Rs will directly affect your quality of life, your financial investment, and your ability to refinance and sell. We take the time to be sure that your CC&Rs are customized to the building and the owners’ needs. Our CC&Rs are widely recognized as among the best in California, particularly for smaller buildings where we have set the industry standard.
Sirkin & Associates has been guiding clients through the San Francisco condominium process for almost 20 years, and has completed more SF conversions than any other firm. In 2011 we handled well over half of all of the condominium conversions in San Francisco. Over the years, we have been involved in drafting many of the laws that govern SF conversions, and have helped develop many of the procedures used by the City in processing these applications. Our breadth of experience makes it likely that if a glitch appears in the condominium process, we will have seen something similar before and know exactly what to do. And for those rare occasions when a completely new issue arises, we are particularly adept at developing creative solutions that save our clients time and money.