What Are the Risks of Buying a Condo in a Mixed-Use Building?

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In this tutorial, we'll go over the risks that condo buyers can face when buying a condo in a mixed-used building, where there may be separate commercial unit or retail owners with conflicts of interest.

Sometimes, ground-level retail or commercial units are retained by the sponsor or developer because they are so lucrative in terms of rental income. This is especially common in cities like New York where historically rents have been outsized for ground floor commercial spaces in popular areas of Manhattan.

However, this may present challenges to residential owners in a mixed-use building because the developer may have influenced the way that the condo docs, such as the original offering plan and by-laws, were written to favor the commercial unit owner.

For example, the commercial unit owner may have advantages in terms of cost caps when it comes to shared bills for the common areas. Or the commercial unit owner might have a cap in the maximum that they have to contribute per year to special assessments levied by the board. Or the commercial unit owner may be guaranteed a board seat with special privileges or powers.

Remember to read your condo docs carefully. The docs may in fact be fairly written, but it's always important to trust but verify.

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Hauseit Group LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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