Loans > Commercial Financing of Condo Conversions Involve Entitlement Risk
Commercial Financing of Condo Conversions Involve Entitlement Risk
There is No Guarantee
the Condo Map Will be Approved
When a developer
buys an apartment building and wants to convert it to condo's, there
is significant amount of entitlement risk. Entitlement risk is the
risk that the various government agencies with jurisdiction will not
issue the required approvals for the construction project to proceed.
A Condo Map, a
Tentative Map, a Condo Declaration, and a Subdivision Map all mean
the same thing when you are talking about a condo conversion project.
The entitlement risk associated with a condo conversion is the same
as getting a tentative map approved on a subdivision that has zoning.
The risk is unique to the jurisdiction of wherever the deal is, like
any political risk.
If the apartment
project is zoned for condominiums, recording a subdivision map and
getting DRE approval to sell units is a matter of timing risk.
there is some Political Risk associated with condo conversions. Generally
the Political Risk involves market/subsidized rental housing advocates
challenging the rental supply with conversion approvals but before
the planning commission vote.
permit conversion without public forum approval. Again, this is a geographic
C-Loans would llike
to thank Erich Beringer of Scripps Investment and Loan for contributing
this article. Scripps Investment and Loan is one of the largest hard
money construction lenders in California. They specialize in huge land
development loans and huge subdivision construction loans in the Western
States, primarily in California. They recently closed an $8.6 million
construction loan on a residential subdivision for C-Loans.You
can apply to Scripps for a construction loan or land development loan
by using C-Loans.com.
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