What is a Condominium?
A Condominium is created when a single entire property is divided into multiple Units, each Unit can then be separately sold, gifted, or mortgaged, and each individual Unit will have a separate TMK number, property tax assessment, and property value. All Units in a condominium also share a common ownership interest in the portions of the property jointly owned and used by the Unit’s Owners, known as the Common Elements. The Unit Owners are all bound by the rights and obligations dictated in the Declaration, Bylaws, Condo Map, and House Rules, also known as the Controlling Documents. The Unit Owners all have voting rights and are all Members of their Condominium Association, which is responsible for managing the condominium, and maintaining the ability for Unit Owners to enjoy and make use of the Common Elements.
The process of creating a Condominium here on Maui, usually involves utilizing an experienced team of an Architect, Engineer, Escrow Agent, Real Estate Broker, and an Attorney, along with either the Owner(s) or Lessee(s) of an entire piece of property, known as the Developer.
why hire an experienced MAui condominium law attorney
A Real Estate Attorney that is experienced in Condominium Creation and Property Development in Maui County, will be able to perform a Condominium Assessment on the property, and confidently determine and explain the condominium project’s feasibility and worthwhileness. An experienced Condominium Attorney will draft the important legal documentation, including the Declaration, Bylaws, and Developer’s Public Report and disclosure statements, to purposely avoid potential future issues that may arise after the newly created Units have been sold, along with creating an attractive and responsive Condominium Association for all the Unit Owners to be apart of and enjoy.
If after the Condominium Assessment is approved, an Attorney will assist the Developer in choosing the the team of professionals to be associated with the Condominium Project, to work closely with the architect and engineer to design and create the Condominium Map, to navigate the stringent construction standards, adhere to the Maui zoning code requirements, Hawaii’s environmental regulations, and to properly draft and record the Declaration, Bylaws, along with applying for and obtain the necessary confirmation letters, permits, and inspection approvals from the County of Maui, and to properly draft and submit the full Developer’s Public Report, which includes all of the supporting documents and required disclosures, to the Real Estate Commission.
What are the key steps to beginning my condominium project?
Step 1: Land Ownership or Acquisition
In order to start the condominium process an Owner(s) or Lessee(s) of a property, must have legal ownership or possession of the entire piece of property.
Land ownership can come about in many ways:
- People that already own land, received either by gift, or inheritance.
- People leasing the property long term
- First time or second time home buyers.
- Multi-owned property, where the owners each have a percentage interest
- Corporate Real Property purchasers for investment purposes.
Step 2: Site Visit with Attorney
After the Condo Assessment has been made, and it has been determined by an Attorney, that the property is able to create a condominium, the Developer(s) and the Attorney will usually meet at the property, to discuss the potential condominium project, to meet with the Developer(s), and discuss any problematic issues that may be found during the site visit.
Step 3: The Condominium Map
The first task for the Developer(s) is to hire an Engineer or Surveyor to draft a site map of the entire property. A Condominium Map usually consists of a Site Map and Floor plans and Elevations, along with a stamped Architect’s Certificate.
Step 4: The Declaration and Bylaws
Once the Condominium Map has been approved by the Attorney, the Attorney will draft the Declaration and Bylaws uniquely tailored for the specific property, making sure that the Condominium is created exactly how the Developer desires, and nothing in the controlling documents would violate any of the State or County’s laws, rules, requirements, or restrictions. The Attorney will make sure that the Declaration, Bylaws, and Condominium Map are drafted and recorded correctly, as these documents along with the House Rules, will create binding obligations and legally enforceable requirements, that must be strictly followed by the Unit Owners. It is important to hire an experienced Condominium Attorney to draft these documents correctly, as once signed and after the Units have been sold, changes or amendments to the Bylaws, Declaration, or Condominium Map may require consent of all the Unit Owners.
Step 5: Creation of the Condominium Property Regime
Once the Declaration and Bylaws have been recorded, along with the Condo Map, the Condominium is officially created and the new Units will now have their own TMK, along with an increase in market value and taxes due the following year. Even though the Units and the condominium have been created, none of the newly created Units can be sold until the Developer’s Public Report is approved and given an issued an Effective date.
Step 6: Final Inspections and Approvals Letters
Once the Condominium Map has been finalized, the Miscellaneous Inspection Reports are applied for with the County of Maui. After the Declaration and the Bylaws have been recorded, a No-AG Restrictions letter may be applied for, if applicable, and the Engineer and Architectural stamps and reports of approval, and Developer’s disclosure statements are obtained.
Step 7: Preparation and Submission of the Developer’s Public Report
The Attorney will be able to properly draft and prepare an extensive, detailed, and thorough disclosure report and the supporting documents, regarding the property and the proposed condominium project, known as the Developer’s Public Report. Once this Developer’s Public Report is finalized, it is submitted to the Real Estate Commission of the State of Hawaii, for approval.
Step 8: DPR approval and Post Registration Developer responsibilities
Once the Developer’s Public Report has been approved and issued an effective date, the Developer at that time can sell all of the Units, as long as the Developer adheres to the Real Estate Commission’s required, post DPR Approval Developer’s duties and responsibilities.
The Real Estate Commission requires that the Developer files an Annual Report, until all the Units have been sold, and if the Developer or Unit Owners make any material or pertinent changes to their property or Condominium Documents, either an Amendment or an Amended Developer’s Public Report must be filed with the Real Estate Commission.
Ready to start your condo project?
UPCOUNTRY LAW is here to help you every step of the way, with experienced counsel.
TO GET STARTED call UPCOUNTRY LAW at (808) 419-6662, or use our handy CONTACT FORM to begin the process.
***NOTE: this article, advertisement, and website is for general information purposes only and should not be considered as legal advice or does not create an Attorney-Client relationship with UPCOUNTRY LAW or with Attorney Garrett J. Eden, Esq.