Does Your TIC Agreement Require Condo Conversion?
Does your TIC agreement require condo conversion if your building wins the lottery? That is something you should know before you buy into a TIC.
If your agreement mandates conversion, and you live in a building with a fair chance of winning the lottery (ie no protected tenant evictions, etc.) your group needs to have a pool of funds ready to go for the costs of condo conversion. Condo conversion is a significant expense, for the group and possibly for individuals as well. And this is on top of your regular dues, taxes, mortgage and insurance, which must continue to be paid through the conversion process.
All the bills for condo conversion come due in fast and furious progression. Make sure your group has discussed how to handle, and has a financial plan, so you don't waste time figuring this out after you win the lottery.
For common condo conversion charges, you can either build a condo conversion fund into your dues or you will need to levy special assessments. For code violation repairs to individual units, each owner is responsible for any work from the walls in. Make sure owners are aware of this. There should be ongoing reminders at your meetings about the need for individuals to have a savings account set aside for condo conversion.
If your TIC does not mandate condo conversion, then you must have a process outlined in the agreement for determining whether you will or won't convert. Everyone in the group needs to be aware of this process, and you may want to revisit this issue from time to time and amend the agreement as necessary. I think leaving the question of whether to convert or not to convert could be a very divisive issue, if left up to a vote that occurs after winning the lottery.
If your agreement mandates conversion, and you live in a building with a fair chance of winning the lottery (ie no protected tenant evictions, etc.) your group needs to have a pool of funds ready to go for the costs of condo conversion. Condo conversion is a significant expense, for the group and possibly for individuals as well. And this is on top of your regular dues, taxes, mortgage and insurance, which must continue to be paid through the conversion process.
All the bills for condo conversion come due in fast and furious progression. Make sure your group has discussed how to handle, and has a financial plan, so you don't waste time figuring this out after you win the lottery.
For common condo conversion charges, you can either build a condo conversion fund into your dues or you will need to levy special assessments. For code violation repairs to individual units, each owner is responsible for any work from the walls in. Make sure owners are aware of this. There should be ongoing reminders at your meetings about the need for individuals to have a savings account set aside for condo conversion.
If your TIC does not mandate condo conversion, then you must have a process outlined in the agreement for determining whether you will or won't convert. Everyone in the group needs to be aware of this process, and you may want to revisit this issue from time to time and amend the agreement as necessary. I think leaving the question of whether to convert or not to convert could be a very divisive issue, if left up to a vote that occurs after winning the lottery.
posted by rp at 12:22 PM
2 Comments:
I'm curious about furnaces. We have a two unit TIC, with each unit owning their own furnace. Is each unit responsible for repairing her/his own furnace?
Your TIC agreement should make clear whether maintenance is the responsibility of individual owners or the common area. Usually anything in your unit is your responsibility, but shared areas like stairways, roof, basements, etc. are shared responsibility. In our building the water heaters are shared, but we have gas wall heaters in each unit which are the responsibility of each owner.
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