If a typical subdivision does not fit your development goals or creates more problems than it solves, then a land condominium may be the right fit.
Many clients have reached out to us with a desire to create a separate parcel of property so it can be sold or financed separately. However, sometimes the locality’s subdivision ordinance does not allow the subdivision because of setbacks or other restrictions, or timing requirements make processing a subdivision by ordinance problematic. Other clients have sought advice on creating conveyable space within a building that can be sold as a separate unit, such as for a grocery store anchor in a mixed-use building, but the applicable jurisdiction does not have a subdivision ordinance for this type of airspace subdivision. In these and other situations, creating a Land Condominium may be the right fit for the desired goal.
Land Condominiums can be used as a vehicle to effectively subdivide property into separate legal parcels or land units. This achieves essentially the same result as if you were to conventionally subdivide the property under a locality’s subdivision ordinance, only without having to comply with the subdivision ordinance requirements and restrictions. The land units created are assigned their own tax map parcel number and are freely conveyable and financeable. The shape and size of each land unit are not subject to any restrictions. For instance, the land unit boundaries can trace building footprints or you can create larger land units which you can then further subdivide as the development of the property progresses.
The Land Condominium established does not need to be registered with the Virginia Common Interest Community Board, like typical residential condominiums, and the Land Condominium instruments do not need to be submitted to any jurisdiction for approval. This means that the division of your parcel into separate land units can be accomplished very quickly. The Land Condominium is set up as a vehicle for dividing property, rather than for governing the use of the divided property and common elements between various land unit owners. Although there are certain statutory requirements that need to be met under the Virginia Condominium Act, the Land Condominium instruments can be kept bare-boned, containing only what is needed to comply with the Condominium Act to establish the Land Condominium.
Frequently we still need to address shared spaces, utilities, shared expenses, maintenance responsibilities, or necessary easements between different land unit owners. For example, in a building where one land unit contains a grocery store anchor while the remainder of the building is a separate land unit containing a residential building condominium, the foregoing issues may need to be addressed. To handle these scenarios, a reciprocal easement agreement is often used. Because the reciprocal easement agreement is a private agreement between the parties, it can be tailored to address the specific operational concerns and agreements between the parties. Alternatively, we can set up a property owners association to address the various matters on which the land unit owners will need to cooperate, or we can establish a traditional residential or commercial condominium regime over one or more land units (as in the example below).
A Land Condominium, together with a reciprocal easement agreement or separate property owners association, allows for flexibility in subdividing property and creating governance structures between the land units that may not otherwise be available under a traditional building condominium regime or under the subdivision ordinance. A good situation where the use of a Land Condominium benefitted the development of a project is when one of our clients reached out to us and sought our counsel as to the best way to structure their planned development of an approximately 650,000 square foot building to be constructed on a 3 acre site, which building would include, among various amenities and a below grade parking garage, approximately 400 residential dwelling units and 3 separate commercial spaces ranging in size from approximately 55,000 square feet to 6,000 square feet. We recommended subjecting the site to a Land Condominium regime whereby the residential dwelling units and garage would be one land unit and each of the commercial spaces would be separate land units, allowing for each land unit to be separately conveyed, financed, and taxed. It also allowed the residential land unit to be subjected to a conventional building condominium so that the client could sell individual residential condominium units. We then subjected the Land Condominium to a reciprocal easement agreement which addressed easements, maintenance, and cost sharing between the land units.
If you think that a Land Condominium may be a good solution for your development needs, or if you would like to learn more about how land condominiums can be used in your development projects, please do not hesitate to reach out to one of our transactional attorneys for more information.