
If you own a commercial building and are looking to get the most value out of your investment, one option to consider is creating a commercial condominium association. This article will explore some of the benefits of commercial condos, and provide a brief overview of the process to create a condo association. A condominium is a form of ownership of real property within a common interest community where portions of the real estate are designated for separate ownership, and the remainder is designated for common ownership. Colorado permits this form of ownership pursuant to the Colorado Common Interest Ownership Act, C.R.S. § 38-33.3-101 et seq. (“CCIOA”). According to CCIOA, no zoning ordinance, or other real estate use law or regulation may impose any requirement upon a condominium which it would not impose upon a physically identical development under a different form of ownership. In other words, merely converting the ownership of the real estate to a condominium should not require additional governmental approvals or intervention.
In a commercial context, such as an office or industrial building, this form of ownership can create flexibility and value for an owner by creating individual saleable assets (units). Creating condos allows a building owner to avoid having to sell the property as a whole, and/or avoid going through a costly and time-consuming subdivision process to subdivide the land. Additionally, the owner (called the “declarant”) has complete control over the condo process and result; including the control to define the specific offices, buildings, floors, and common areas, and control to determine the terms of the association and the management. Once the project is finalized, the declarant even has the control and flexibility to sell off some of the units, and retain ownership of others. Condos also offer an attractive form of ownership for potential buyers. Each unit owner becomes an owner in the association, allowing for the right to vote on important management issues, and the sharing of common expenses – typically determined by the square footage of a unit in relation to the building as a whole. Potential buyers may appreciate that the common elements, such as structural building components, landscaping, and parking areas are all maintained by the association. Business owners may also recognize that when they purchase a condo they are building equity in their business, rather than throwing money away for rent.