Advice on multifamily HOA and re-title?

Question

Hi BP

Question for the community that dabbles in the HOA and title realms. In 2019, we closed on 15 townhomes in a 16-unit community - the community consists of four buildings with four units each. The properties are individually titled, and fall under an HOA that was established twenty years ago.

In 2021, we plan to purchase the 16th unit from the owner, at which point we’d like to abolish the HOA and convert the townhomes back into apartments. The reason for this is two-fold.

1) banks don’t like that we have a controlling interest in the HOA as a majority owner, so selling the townhomes off one by one would require buyers to use non-conventional lending. This drastically shrinks our buyer pool.

2) big “if” here, but if we could retitle these as fourplexes, we could seek conventional financing (vs the commercial loan we currently have) and increase our cash flow substantially through lower rates and a 30-year am.

Have any of you dealt with something similar? Curious to know if there are any attorneys reading that have some thoughts on how best to accomplish this.Thank you!JN

Jennie Ballard · Answer

Newbie here but I would check your town ordinances zoning on what is required on a property in multifamily zoning. For example, offstreet parking side lot minimums, sprinkler system, etc. Google town name + ordinances to find online copy.

Once you are reasonably sure it would be a conforming use, go talk to your city. I think you would need to re-survey and re-plat as MF lots plus get new permitting.