Converting a building into condos?
Condominium conversion inspections are a necessary part of the process.
A condominium conversion is the act of transforming an existing building (usually an apartment building) into condominiums for individual resale. At first glance, it might sound like a simple, straightforward process, but the reality is a lot more complicated.
In addition to navigating existing tenants and filing paperwork, developers must also be aware of any necessary renovations and repairs. Real estate development involves leaning heavily on building codes, local zoning laws, and the real estate market. Failure to follow the proper procedures could end up costing you hundreds of thousands in legal fees.
Condominium conversion inspections can reduce these risks and place your investment on sturdier ground.
Condo inspections should take place at three key times during the conversion process. In this article, we’ll list when condominium conversion inspections should be completed and why each of these stages is a crucial time for an expert inspection.
1. Before Purchasing/Renovating
The first phase of the condominium conversion inspection should take place before you purchase the building or—if you already own it—before renovations begin. This will provide you with an accurate snapshot of the building’s condition and give you an idea of what you will need to do to complete the conversion.
The conversion report should include a list of the required fixes, estimates for the time and cost of the project, and life expectancy of existing systems and features.
It is important to go into the first inspection with an open mind. Remember, even if there have been no recent complaints about the building, older structures may not be up-to-date with current building codes. There may also be hidden issues that don’t come to light until a professional inspection uncovers them.
According to the Roth Act, an engineer or architect must prepare a report that includes:
- the current condition of the building,
- the age of certain components of the building,
- the expected remaining useful life of the components,
- the estimated replacement cost of these components, and
- whether there are any pest infestations (and if so, whether they have been properly treated).
Once you have the report, you’ll have a solid punch list you can use to start renovations.
2. After Renovating
Just because renovations are recent does not mean that they were done properly.
Construction workers and general contractors are prone to error—just like anyone else. Having a professional inspector double-check their work acts as quality assurance before residents start buying units and moving in.
Whatever the state of the building (before or after renovations), this is a crucial inspection! If any major issues surface later on, the unit owners or condo association could file a lawsuit against you to the tune of hundreds of thousands of dollars.
In light of this, this is not the time to choose the cheapest option available. Instead, when you hire a building inspector, look for experience, accuracy, and attention to detail.
3. Each Year
As the developer, your responsibility for the property ends once a majority of the condominium units are owned. Once this has occurred, the condominium association takes over for the maintenance and upkeep of the property and the Developer can move on to other projects.
But this doesn’t mean that inspections are no longer necessary.
If you find yourself on the board of a condominium association, you will need to be prepared for an annual reserve account analysis.
Under Florida law, all condo associations must budget for a reserve account, a pool of funds that will be used to cover large-scale and emergency repairs and maintenance.
The amount in your reserve account is an estimate but it should not be a guess. The law states that reserve accounts must be based on the “estimated remaining useful life and estimated replacement cost or deferred maintenance expense of each reserve item.”
This is information that can only be gained through a professional inspection. Once you know how long an item can be expected to last and how much it will cost to replace it, you can update your association fees accordingly to minimize surprises (and outrage) later.
Condominium conversion inspections are crucial—both before and after renovations. But just as important is finding a building inspector you can trust.
Contrary to what many believe, the purpose of an inspection is not to hear that everything is okay. The purpose is to know exactly what condition the property is in. If your inspector rushes through his/her work, only performs the bare minimum checks, or simply doesn’t have the requisite experience, you won’t have a clear understanding of the state of your condominium complex.
BIS is one of the most qualified inspecting firms in the country, with more than three decades of experience and more than 75,000 inspections completed. We have also been trusted by news organizations and county, state, and federal courts to give our expert opinion.
Call today or fill out our online quote form to request your inspection.