Sep 8, 201511:08 AMOpen Mic
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Benefiting from Wisconsin’s condominium law
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Traditionally, real estate ownership has been limited to two-dimensional platted parcels of land, with limited opportunities to stack “vertical ownership” on a parcel. The limitations of two-dimensional ownership make it very difficult to create vertical developments that can be separately owned and financed. The condominium form of ownership allows for three-dimensional, stacked ownership of property interests upon an underlying two-dimensional parcel, which permits great flexibility in providing multiple ownership and financing opportunities.
Essentially, what the Wisconsin condominium law does is allow for the creation of three-dimensional parcels of real property (i.e., “boxes of air”) to be owned, taxed, mortgaged, and used separately and permanently. These three-dimensional parcels can be separately situated within the same building or within multiple adjacent and/or connected buildings on the same block. In turn, these separately owned condominium units could be constructed, financed, leased, managed, and operated independent of one another, even though they are situated within the same encompassing real estate development project.
In addition to separating a property into ownership units, the Wisconsin condominium law allows for the establishment of “common elements,” which are physical spaces, infrastructure, mechanical systems, utilities, and similar types of improvements or real property interests within the condominium development that are deemed owned by all of the owners of units, with the benefits and obligations of such ownership proportionally shared. In addition, some of these common elements may be designated as “limited common elements,” meaning that certain specific units are determined to have the benefits and burdens of ownership and use.
The conventional and more common uses of the condominium law have typically included classic residential high-rise and townhouse condominiums. However, as development trends continue to shift toward in-fill urban development and redevelopment opportunities, the condominium law provides a very flexible and efficient tool for multi-use commercial development projects in which multiple owners desire to own, operate, and finance separate components of a project. Accordingly, projects incorporating a single building or multiple integrated buildings that include retail, office, residential, parking, and, in some cases, publicly owned and used components can be structured through the condominium form of ownership to allow for several distinct ownership units that can be separately operated and managed with varied public and private financing sources. The flexibility afforded by the application of the condominium law often is critical in assisting a developer with addressing the types of construction, financing, use, and operation challenges that can arise in the redevelopment of an urban in-fill site.