Understanding the Condo Conversion Process

The condominium (“condo”) market is often the go-to option for low-to-moderately priced housing in metropolitan areas across the nation. When the demand for condos is high, many investors and developers look to condo conversions to increase their profit revenue, since working with an existing building is generally faster, less expensive and less risky than building from the ground up.

When converting an existing property into condos, it’s important to fully understand the developmental process, including steps taken to vacate the property, fees and costs, state and local regulations, financing and timing. Let’s explore a general overview of the process and some important things to consider.

What is a condo conversion?

A condo conversion is when a property that is wholly-owned by a single title holder is transformed into individual residential units that can be sold to the public. It usually involves converting rental units like apartments, but other types of properties can be converted into condo ownership, such as a hotel, office space, parking garage or an industrial building.

What are some pre-conversion factors to consider?

When investing in condo conversions, there are some important factors to consider before you purchase a property:

1. Consult with a real estate attorney. It’s best to retain the services of a real estate attorney who specializes in condo conversions and is well-versed with state and local laws that could impact your project. In San Francisco, for example, condo conversions are limited to buildings of no more than six residential units. Those units must be partially owner-occupied, meet certain occupancy requirements and have a written Tenancy-In-Common (TIC) agreement in place. Having an attorney who knows the local restrictions and limitations can help you avoid making costly mistakes.

2. Conduct a market assessment. With the help of a real estate professional, conduct a market assessment of the property to determine eligibility and feasibility. The assessment should include information about comparable sales in the area, market trends and property history, such as ownership percentages and eviction history. Conducting an assessment allows you to determine if the property qualifies and the converted units are likely to yield a profit, once the cost of purchasing the building and making renovations are deducted from your investment.

3. Retain a licensed professional to examine the property. Prior to purchasing a property, it is important to review the condition of the land and structure with a licensed professional, such as an architect, engineer or land surveyor. Most states even require it. In Florida, for instance, The Roth Act requires an engineer or architect to prepare a report before the property is purchased or renovations begin that discloses to the local municipality, among other things, the condition of certain components of the property and estimated replacement costs and a pest infestation report from a certified pest control operator.

4. Talk to a mortgage broker. You will need to secure proper financing in order to convert a building into condo units. Speaking with a mortgage broker prior to starting a condo conversion can give you an idea of mortgage-related costs, such as loan terms, interest rates and closing costs.

5. Understand the role of the title company. The assistance of a title company is imperative to complete your condo conversion. The title company will provide information about the ownership of the property and whether any liens or restrictions have been recorded against it. It will also record documentation for the project, such as the Master Deed and Covenants, Conditions and Restrictions (CC&Rs). When it is time to sell the units, the title company can also issue title insurance policies to protect the property rights of the new owners.

What are the general steps for condo conversions?

A condo conversion is a complex and detailed process that involves multiple steps and the assistance of various specialists – a real estate attorney, land surveyor, city departments, title company and mortgage broker. Specific requirements and laws governing condo conversions vary by state and local municipality, but may include some variation of the following:

1. Tenant Notice or Vacancy Exemption. The property owner is generally required to notify tenants of their intent to convert the building into condos. Most jurisdictions have various tenant rights and protections like the first choice to purchase (a process referred to as the right of first refusal), the right to relocation assistance and more. Alternatively, if the property is vacant, it may require you to file a vacancy exemption form and other applicable paperwork. All vacancy paperwork should be filed according to timelines set by the local jurisdiction.

2. Application process. The application process can include several different steps and review periods, and may include approval from the local jurisdiction for the following:

    • Application                           
    • Tenant history and provisions
    • Inspection
    • CC&Rs
    • Site plan and floor plans
    • Utility plan
    • Tentative Parcel Map
    • Subdivision Map
    • Preliminary Title Report
    • Affordable housing proposal, if applicable

An application fee is generally required at the time an application is submitted. Depending on the nature and complexity of the project, additional documentation may be required. It’s best to research the application process for your local jurisdiction for specific details.

3. Recordation of applicable paperwork. The property officially becomes condos after the property owner signs and notarizes all required documentation, including the final subdivision map and CC&Rs, and all appropriate documents are recorded in the public records.

4. Post-conversion refinance and sales transactions. The final step in the process is establishing separate title ownership for each individual unit, which generally requires refinancing with separate mortgages for each unit. Typically, the title company assists with the closing of the individual units.

How much does a condo conversion cost?

Every condo conversion is different, so it depends on the size, scope and location of the project. There are application fees, attorney fees and survey fees that are easy to determine early on. It is harder to estimate costs for renovations, repairing any code violations, payment of advance property taxes and the insurance required for condominium buildings. You may want to get bids from several contractors, and research property taxes and insurance for comparable properties in the area to give you a better idea of the total cost.

How long is the condo conversion process?

The time it takes to complete a condo conversion depends on many variables, including the complexity of renovations, the availability of professionals, legal requirements and the local jurisdiction’s approval process. Generally, a conversion with no construction can take between four and six months, while a more complex conversion can take up to two years or more.


If you’re an investor or developer considering a condo conversion project, you will need to commit a considerable amount of time conducting research and talking with qualified professionals before getting started. While a condo conversion can be a relatively inexpensive way to increase your profit revenue, it can wreak havoc on your budget if done improperly. Knowing the intricacies of the property, area, conversion process, and state and local laws will make for a more successful experience. When you’re ready to take the leap, Old Republic Title has a nationwide network of professionals available to assist you with all your title and closing needs.


Old Republic Title, its officers and employees do not provide, and this communication is not intended to be investment, tax or legal advice. Old Republic Title makes no representations or warranties regarding the accuracy of the information or tax consequences addressed herein. You should consult an investment, tax or legal professional of your choosing to advise you of the benefits and risks of your specific transaction.