At least half of Seattle’s ADUs are now condoized.
The condominiumization of ownership is very similar to what different jurisdictions do in terms of how they review subdivisions. I was brought into this industry because of all the bureaucracy, but now we’ve almost removed all of it because you go in and get your building permit; the condominiumization is just the lawyer and making maps in the declaration to record the condominium.
This is the wild wild west! This is the most unique time in history. It really feels like we’re going back to the 1800s to find gold. We’re now talking about kind of prospecting…getting into all these single family lots, converting them to multifamily, essentially allowing three dwelling units on every single family lot.
How do we figure out how to mine that potential? Is the highest and best use to do two units, three units combined with a neighboring property, do four? Do a subdivision, then add houses and accessory dwelling units? It’s opening up a whole new thing when you have a state mandate that tells all the cities that they have to allow for three dwelling units or more in their single family lots. It’s a crazy time. We’ve never gone through anything like this before.
Sometimes it’s challenging for people who have been in the industry for 30 years. They’ve got preconceived notions for what a condo is, what an HOA is and they sometimes have difficulty seeing it through a new lens. This is a time that requires new tools, new education, and a new way of looking at things.
(In Washington state) jurisdictions are not allowed to treat the condominium different than another form of ownership. That means if it’s one lot and you going to get a building permit to build three dwelling units on it, the jurisdiction cannot then say “Well, now we’re going to impose this audit. We’re going to give you new restrictions and requirements.”
Condominiums are privately done by the surveyor and the attorney. They get recorded at the county records office. The assessor is going to look at it and give it a new tax parcel number and a new value. It’s not reviewed by the jurisdiction, and they’re prohibited from imposing impediments on it.
As the first ADUs started getting condominiumized, the buyer did not care that it had an HOA or was considered a condominium. Whether it was a single family or an accessory dwelling unit on the building permit was not affecting the marketing. Very quickly, you saw a shift from people who were doing townhomes, row houses and multifamily projects, they were now coming into the single family neighborhoods. I can go into neighborhoods that were previously single-family zones and not allow to be subdivided, and I can build three dwelling units and essentially subdivide without subdividing.
In the DADU/ADU world, we call them “airspace condos” — a boundary that starts on the ground and goes up in the air, just like a subdivision. When you look at one of these maps, it looks like a subdivision map because the unit of the condo has nothing to do with what’s inside that space. You might’ve condominiumized a vacant piece of ground, might’ve condominiumized a single family home. You might’ve condominiumized an accessory dwelling unit or a duplex or a triplex. The underlying type of product or feature or thing that is built on the ground has nothing to do with when something’s called a condo.
They might have some common elements. Those are typically going to be things like a driveway that everybody shares, maybe a walkway or maybe a place to put your trash. But it’s also important to understand that when you go to divide these areas out, the jurisdiction’s not reviewing the condo map.
How’s this property going to interact with itself when it’s all owned by different people? That’s something you need to think about when you’re putting together your condominium. How are walkways going to be used? How are driveways going to be used? Where’s my parking going to go? There might’ve been only one parking stall required for the building permit, but you might want to put a second or a third in order to serve the accessory dwelling units. So, you have to start thinking about site elements.
The units are what you own. The common elements are shared by everybody, and the limited common elements are shared by less than the whole. That could be something like a parking stall or a bicycle storage area or something that not everybody gets to use, but it’s a shared space of some kind or assignable space.
← In this example, somebody reclassified a single family home as a DADU (detached accessory dwelling unit) in the building permit process. Then they went and got a permit for a duplex, and they called one half of the duplex Single Family and one half AADU (attached accessory dwelling unit). They met all the code requirements because the City of Seattle says you can have three dwelling units, but one has to be attached to the primary.
You don’t have to wait until you’ve built. You can condo off of the existing structure as one of the units and sell it, recover a lot of the initial capital and then focus on building out the rest.
Terrance Wilson, Esq. owns the Wilson Law Group of Washington. His law practice focuses on real estate development and the various legal issues affecting developers, property owners, and related consultants. twilson@wilsonlawgroupwa.com
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AZ House Bill 2720 must be adopted by muncipalities with a population of more than 75,000 persons on or before 1/1/2025
9-461.18.A. A MUNICIPALITY WITH A POPULATION OF MORE THAN SEVENTY-FIVE THOUSAND PERSONS SHALL ADOPT REGULATIONS THAT ALLOW ON ANY LOT OR PARCEL WHERE A SINGLE-FAMILY DWELLING IS ALLOWED ALL OF THE FOLLOWING: 1. AT LEAST ONE ATTACHED AND ONE DETACHED ACCESSORY DWELLING UNIT AS A PERMITTED USE. 2. A MINIMUM OF ONE ADDITIONAL DETACHED ACCESSORY DWELLING UNIT AS A PERMITTED USE ON A LOT OR PARCEL THAT IS ONE ACRE OR MORE IN SIZE IF AT LEAST ONE ACCESSORY DWELLING UNIT ON THE LOT OR PARCEL IS A RESTRICTED-AFFORDABLE DWELLING UNIT. 3. AN ACCESSORY DWELLING UNIT THAT IS SEVENTY-FIVE PERCENT OF THE GROSS FLOOR AREA OF THE SINGLE-FAMILY DWELLING ON THE SAME LOT OR PARCEL OR ONE THOUSAND SQUARE FEET, WHICHEVER IS LESS…
9-461.18.H.6. “RESTRICTED-AFFORDABLE DWELLING UNIT” MEANS A DWELLING UNIT THAT, EITHER THROUGH A DEED RESTRICTION OR A DEVELOPMENT AGREEMENT WITH THE MUNICIPALITY, SHALL BE RENTED OR SOLD TO HOUSEHOLDS EARNING UP TO EIGHTY PERCENT OF AREA MEDIAN INCOME.