Owning Airspace – Condo Confustion

As prices began rising, buyers began considering condominium purchases as a way to control pricing. This week serves as a reminder regarding properties with shared ownership. Next time, we’ll take a deep dive into challenges, benefits and buyer considerations. In the meantime, enjoy!

Moving On Up

What do you call ownership of residential airspace? Since 1961, the concept of condominium apartment ownership has blossomed throughout the country. Interestingly, Hawai`i was the first state to enact legislation allowing for development of condominium projects. When it comes to multi-family units, new construction in East Hawai`i has, for decades, taken a back seat to condo conversions. In fact, many don’t realize that Waiakea Villas and Hilo Lagoon were originally hotel properties.

Several local commercial buildings, including the offices at 688 Kinoole (the building directly across the street from BJ Penn’s Gym) are individually owned condo units. The condominium form of ownership is so widely accepted that it’s all fairly straight-forward, right? Maybe not.

Single-Family-Condominium?

The difficult concept, especially for buyers, is the idea that condominium ownership can exist even with single-family residential units. Time was, condominimization of properties zoned both single family residential AND agricultural was commonplace. In Hawai`i, condominium laws are State laws, while zoning is the purview of the County. Property owners previously used the condominium process as a way to bypass County sub-division requirements. While it is no longer possible to ignore County zoning, we commonly see individual condominimized properties on the market.

As in a conventional condominium project, all land is jointly owned, but each owner has exclusive right to use their designated portion of the property. Similarly, there are also limited common elements associated with each property. These are normally limited to a roadway or shared driveway. When dealing with individual residential properties, it’s a difficult but important distinction that although each property is assigned a tax map key number, the County does not regard individual portions of a condo project as separate parcels. This makes perfect sense.

Remember, the structure of the project is the same as a condominium building so parcels are each assigned a CPR (condominium property regime) number. Each is a unit and not an individual parcel. Remember, the County of Hawai`i issues building permits.

Agricultural Land

There are strict limitations regarding multiple dwellings on Agricultural land. Agricultural zoning requires any dwelling after the first be built as part of a working farm. An approved farm plan is required. If a farm plan was not put into place when the condominium was established, every owner must consent to a newly implemented plan.

Language in the original condo docs might provide alternate instructions related to how the project is to operate, but the County is probably not automatically obligated to consider an agreement between owners, especially if it differs from normal County guidelines. Fortunately, many condominimized properties have farm plans in place. Remember, projects with existing dwellings are not usually impacted. When it comes to buying an Agricultural condominium unit, it is vital to review all condo docs and any related farm plan.