Limited Common Element In Condominium
Ask the Real Estate Lawyer: Real Estate Law Q&A
REM #LAW 744
By Ilyce R. Glink and Samuel J. Tamkin
Summary: A ThinkGlink reader is thinking of
buying a condominium and converting the basement to make it into a duplex. Sam
and Ilyce explain what a limited common element is and how to apply for a permit.
Q: My husband and I have in put an offer on a first floor gut-rehabbed condo
unit in Chicago.
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As part of the contract, we asked that the developer allow us to duplex the
condo with the basement below.
Rather than duplexing down, he offered to give us a large part of the basement
as a limited common element. He said that he didn't originally apply for a permit
on the basement, so he couldn't officially sell us the basement as real estate.
The basement already has plumbing installed for a bathroom, so the developer
has suggested that we can turn the basement into a family room and join it to
the first floor by adding stairs to the condo.
Second, the attorney for the developer suggested that it would be much easier
for us to apply for a permit on the unit to turn the basement into a part of
our home than it would be for the developer.
The attorney said the builder can't wait on the city to re-do the permits,
and suggested that we wait 3 to 6 months after we buy the unit to apply for
permits with the city. He suggested that if we want to be certain that we can
get a permit, we could put a 15 to 30 day due diligence clause in the contract,
so that we can investigate whether the basement (as a limited common element)
can actually be turned into real estate, so the unit is officially considered
Do you foresee any legal issues or problems if we turn a limited common element
into our “basement family room?” Is a 15- to 30-day time period
is feasible to find out if this can be done? What else should we be thinking
A: The most important part of your question is somewhat loaded. You already
know that having the developer duplex down into the basement area is the preferable
way to go.
To create a condominium, a developer or other person must comply with each
provision of the applicable state statutes. Usually parking spaces, garages,
balconies, roof decks, storage spaces, garden areas and the like can be designated
as a limited common element.
There are differences in the way you own a fee interest in a condominium and
the way you own a limited common element of a condominium.
Ownership of a condominium interest means that somebody owns and generally
has exclusive control of some space within a condominium development to call
his or her own. He or she can use that space exclusively and has a certain percentage
of ownership interest in the condominium association and the building as a whole
(the common elements of the building – outside walls, the land on which
the condominium sits and other common areas).
A limited common element is carved out of the common elements of the building
which ordinarily could be used by all and designated for the exclusive use by
one owner. Generally, ownership of a limited common element does not entitle
the owner to “voting” rights. Thus if you have 10 units in a building
and each unit is designated as a 10 percent owner of the building, when it comes
to elections in the association and paying assessments, each owner would pay
10 percent of the costs and could vote as a 10 percent owner of the building.
Depending on how the condominium declaration is drafted, if the basement of
your building is made into a limited common element and if other elements in
the declaration are not reviewed and changed, you could end up with the basement,
but your percentage interest in the association might be too low and other inequities
could arise by creating a large unit for you but causing a large part of your
home to be a limited common element.
While in Illinois you may be able to have a large part of your home be a limited
common element even if it skews many issues in the condominium declaration in
your favor and maybe against you, some other states may not allow it.
You should work closely with a knowledgeable real estate attorney to review
the condominium documents to insure that your interests are protected and that
the association does not retain some of the rights that they otherwise would
have for other types of limited common elements.
For example, if you have a parking space in a garage, the association would
usually retain the right to maintain the parking spaces, repair them, redecorate
them and for all practical purposes close them off while they make repairs.
Also, the condominium documents usually limit the use of limited common areas
to a specific use: a parking space for the parking of automobiles, a wine storage
area to the storage of wine, a storage room to the storage of personal items,
etc. Some of these issues would not apply to you if the basement was part of
your “unit” and not designated a limited common element.
But if the basement was designated as a limited common area, the condominium
documents would have to permit you to use the space as you would your home.
But if the developer drafts the documents this way, he would, in fact, be marketing
the basement as living space to you contrary to the permits he obtained.
Setting aside the rather legalistic conversation about whether your basement
would be a limited common element or not, the bigger issue is whether you can
convert the basement area into living space based on local zoning laws, building
codes and other local ordinances.
Here’s the kicker: Don’t you think the builder would have already
explored the idea? Don’t you think he’d have already thought how
much extra money he’d make by converting the basement area into living
area? Doesn’t it seem likely he would have already explored the possibility,
realized he couldn’t do it legally and decided not to take the risk?
Most developers try to maximize each square foot of space in a building they
are developing to try to get the most money from the development.
What the attorney and developer are telling you just feels wrong. It’s
a guess, but we’d be willing to bet that the builder decided against duplexing
down into the basement because they felt that either they’d have problems
with the rest of the building, or they couldn’t get the permits for it,
or there were other issues that would give the developer a headache.
You certainly talk to someone at the building department about your situation.
Some municipalities are quick to give you advice, others may require architectural
blue prints and plans for them to review before they could tell you definitively
whether you could do it or not.
You will probably find that the City of Chicago will be the later rather than
the former and if you decide to move forward you’ll have to do it on a
leap of faith.
Is it a good bet? Well, if you’re not paying a premium for the basement,
a leap of faith might be worthwhile. The most you’d lose is your time
and you’d end up with a much smaller condominium with a large storage
area in the basement.
In the best case, you’d end up with a large duplex condominium and would
have to be sure you have title insurance to cover the basement area to give
comfort to subsequent buyers that you have exclusive rights to the basement
Tread carefully and make sure you have a good real estate attorney working
with you to help you decide how much risk you’re willing to take in your
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce
R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your
Home Faster and For More Money In Any Market. If you have questions for
them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022
or contact them through Ilyce’s website www.thinkglink.com