Presenting a live 90-minute webinar with interactive Q&A Mixed-Use Development: Structuring Air Rights Condominiums and Other Common Interest Community Regimes Selecting the Optimal Legal Structure, Addressing Core Drafting Challenges, and Minimizing Potential Construction Defect Claims TUESDAY, AUGUST 30, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Robert P . Detrick, Partner, Husch Blackwell , Denver Douglas M. Irvin, Of Counsel, Ballard Spahr , Washington, D.C. Emily J. Vaias, Of Counsel, Ballard Spahr , Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Mixed-Use Development: Structuring Air Rights Condominiums and Other Common Interest Community Regimes Selecting the Optimal Legal Structure, Addressing Core Drafting Challenges, and Minimizing Potential Construction Defect Claims ▪ August 30, 2016 ▪ ▪ Ballard Spahr LLP ▪ ▪ Husch Blackwell ▪ Prepared and Presented by: Douglas M. Irvin, Esq. 202.661.2272 irvind@ballardspahr.com Emily J. Vaias, Esq. 202.661.2239 vaiase@ballardspahr.com Robert P. Detrick, Esq. 303.892.4448 robert.detrick@huschblackwell.com
Mixed Use Development: Structuring Air Rights Condominiums and Other Common Interest Community Regimes A. Zoning considerations and options for subdivision of air rights and horizontal developments B. Types of common interest developments: condominiums, planned communities, and reciprocal easement agreements (“REAs”) C. The air rights condominium as an ownership and development vehicle D. Structuring air rights condominiums and planned communities to address the challenges of mixed-use development: you have to keep them separated E. Addressing the for-sale residential component of a mixed-use development F. Defending builder contracts from purchaser termination claims Construction defects claims —what’s going on behind the curtain G. H. Legislative responses to abusive construction defect claims I. Drafting strategies to discourage construction defect claims 6
Mixed Use Development: Structuring Air Rights Condominiums and Other Common Interest Community Regimes A. Zoning considerations and options for subdivision of air rights and horizontal developments 1. Division of Land through Subdivision Process 2. Reasons to Avoid Subdivision 3. Alternatives to Subdivision B. Types of common interest developments: condominiums, planned communities, and reciprocal easement agreements (“REAs”) 1. General Characteristics: A group of property owners, residential, commercial or both, that are governed by a common scheme of rules (usually a recorded Declaration, Bylaws and/or REAs) intended to regulate the relationships of the owners and their use of individually and commonly owned property within the development. 7
Mixed Use Development: Structuring Air Rights Condominiums and Other Common Interest Community Regimes B. Types of common interest developments: condominiums, planned communities, and reciprocal easement agreements (“REAs”) (continued) 2. Condominiums. (a) Condominiums are distinguished by the ownership of real estate in common by a group of Owners. When a Condominium is created, the property is divided into units, each of which is owned in fee simple by an Owner, and the Common Elements are owned as tenants in common by all unit owners. (b) Common Elements may sometimes have their use restricted to particular Owners (examples include balconies, patios, and garage spaces) as "limited" or "restricted" Common Elements. The drafter usually has great deal of flexibility in how the units and Common Elements are defined. (c) The responsibility for and the control of the Common Elements are vested in the Condominium Association. (d) Condominiums are highly regulated. The formation and sale of Condominium Units is the subject of extensive legislation in nearly every jurisdiction, including the requirement to register a Public Offering Statement prior to offering residential units for sale. 8
Mixed Use Development: Structuring Air Rights Condominiums and Other Common Interest Community Regimes B. Types of common interest developments: condominiums, planned communities, and reciprocal easement agreements (“REAs”) (continued) 3. Planned Communities (or Homeowners Associations). (a) Homeowners Associations are found in situations where a group of property Owners need to, or wish to, act in concert in order to own and operate common facilities or to establish a set of common guidelines for ownership within a group of separately owned properties. (b) A Homeowners Association can be distinguished from a Condominium in that its members do not own property in common. Common Areas are owned in fee by the legal entity that constitutes the Homeowners Association. (c) Examples of the purposes for which Homeowners Associations are formed include: Ownership of common facilities – The ownership, maintenance and operation of common (i) facilities such as open space, swimming pools, hiker/biker trails, storm water detention areas, and recreation facilities. Exterior maintenance of Owners' properties – The HOA can provide painting, lawn (ii) maintenance and other services to Owners. Popular in “turn - key” projects where Owners wish to perform little maintenance themselves. Restrictive Covenants – Enforcement of Restrictive Covenants to promote the appropriate (iii) use of the common areas and to protect the “character” of a community, typically including architectural controls. 9
Mixed Use Development: Structuring Air Rights Condominiums and Other Common Interest Community Regimes B. Types of common interest developments: condominiums, planned communities, and reciprocal easement agreements (“REAs”) (continued) Reciprocal Easement Agreements (“REAs”) . 4. (a) When an REA is used, there usually is no common property ownership among the participants. Common interests are regulated through agreements and easements that run with the land. (b) Control and responsibility under an REA is often vested in a single participant. (c) Enforcement of an REA can more difficult than with other Common Interest models because there may be no statutory funding or enforcement mechanism, as there is with a Condominium or Homeowners Association (these issues must be specifically addressed in the REA). 10
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