Many property owners who own a multi-unit building like a four-plex eventually consider selling the individual units to different buyers. While the idea of simply drafting a deed for each unit may seem simple, converting a multi-unit property into individual, separately sellable residential units requires a formal legal process that establishes a condominium regime.
The Need for Condominium Documents
It would be ill-advised to sell the units in a four-plex individually by simply drawing up a deed with a makeshift legal description. While a deed could technically pass contractual title, it would lead to a host of problems that would make the property practically unsellable and potentially non-compliant with local laws.
To properly sell individual units, you must first create a condominium regime under the Texas Uniform Condominium Act (found in the Texas Property Code). This involves creating detailed legal documents that govern the property:
- Condominium Declaration: This is the master document that establishes the condominium regime, creates the units, defines the common areas, and outlines the rights and responsibilities of the owners.
- Restrictive Covenants: These rules ensure the proper management, maintenance, and use of the property by all unit owners.
- HOA Corporation: Forming a Homeowners Association (HOA) corporation is often necessary to manage and maintain the common elements, such as the roof, foundation, and shared utility lines.
The Replat and Survey Requirement
Before you can create the condominium documents, you must first hire a surveyor to perform a replat. This process ensures the property is accurately surveyed and divided. The surveyor will create a plat that local jurisdictions must approve and record.
The surveyor provides the necessary technical data, which results in the unique and detailed legal descriptions needed for each unit. A proper condominium legal description will look something like "Unit 102 of the Common Interest Land and Elements of The Greatest Building Ever North Condo". Without this replat and survey, you risk issues with:
- Taxation: The appraisal district will not be able to tax the units individually.
- Utilities: The city may refuse to provide separate utility services.
- Zoning: You may be in violation of local zoning ordinances.
Avoiding Future Problems
Owners who try to avoid the cost of the proper legal process—the replat and the condominium documentation—do so at their own peril. If you attempt to sell the units without a regime in place, you will face complications when future buyers attempt to secure financing, get title insurance, or address issues like common area maintenance (such as who pays to fix the roof). Doing it the right way ensures that title is clean and that a legal framework exists to govern the property for all future owners.
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