A condo conversion is an activity in which a piece of real estate is converted from a property with sole ownership to a property in which people can purchase the title to one or more individual units. These units are known as condominiums or condos. Condo conversions occur all over the world, not without controversy, and in some regions, the government has become quite aggressive about regulating them to prevent abuses.
Classically, a condo conversion involves an existing residential apartment building, row of town homes, or converted industrial structure. In order for the conversion to occur, local government officials must approve it. Once approved, a condo association can be established, and individual units within the condo complex can be sold. In some cases, units are sold before they can be occupied, with funds from deposits and pre-sales being used to pay for any construction which needs to be done.
In a condo conversion, people are able to buy the title to the units they occupy. They usually join the condo association, and are required to pay maintenance fees which are used to cover costs which involve the building as a whole. For example, maintenance fees cover things like cleaning and maintaining halls and lobbies, caring for the facade of the building, and so forth.
Someone who wishes to buy a condo must generally be approved by the condo association, and there may be special restrictions in place on occupants, such as bans on renting or subletting condos without approval from the condo association. A condo complex may also be structured with the intent of using condominiums as time shares.
A condo conversion is not the same thing as a building cooperative, although the two may sound similar because they share the concepts of having a housing association and requiring people to pay maintenance fees. In a building cooperative, the title is held in sole ownership; people buy shares in the ownership, not the titles to the apartments or other areas they occupy.
The condo conversion has been cited as a way of making real estate more affordable by allowing people to buy condos in locations where single family homes are too expensive for many people to buy. However, it has also been criticized for putting pressure on the real estate and rental markets. Some landlords attempt to convert buildings in rent controlled areas to condos to make more money, for example, which drives up rents.
