Condominium Conversion Ordinance

How it Works

Condominium Conversion Ordinances serve to both help offset the impact of the reduction in rental housing supply and to protect existing residents from displacement when their apartment unit is converted to a condominium. Ordinances that serve to offset the impact of condominium conversion on rental housing supply may require the seller to pay fees that go toward an affordable housing fund. Policies may require a one for one replacement of converted units or require that a percentage of the converted condominiums are sold at affordable prices. Other options to offset the impact are to establish a lottery to restrict the number of buildings that may be converted, or to give residents, as a group, a “right of first refusal” for the purchase of the entire building.[1] This can allow a mission-driven or non-profit developer to purchase the building that will preserve the units as affordable rental housing.

Protection ordinances require significant advance notice, ranging from 90 days to three years, for residents when a developer is pursuing conversion. Additional protection measures may include relocation assistance if residents will be displaced, first right to purchase for existing residents, lifetime leases, restrictions on rent increases, and discounts for tenants on the sale price of the property. California law requires tenants be granted exclusive right to purchase the converted property under the same terms that the unit is being offered to the general public, and 180 days advance notice of intent to convert the rental unit (§66452.19).[2]

Case Study

Los Altos’ Condominium Conversion Ordinance (LAMC Chapter 14.26, Conversions to Community Housing) has been used effectively to preserve rental housing in the City and along the El Camino Real corridor. In particular, this regulation was applied to a planned unit development at 950-960 N. San Antonio Road where the project’s market rate housing displaced several rental units and the developer replaced them by acquiring adjacent properties and incorporating them into the planned unit development and converting them in rental units. This met the intent of the conversion ordinance and an additional benefit to the community was the project designating six of the existing rental units as affordable housing units to meet the City’s affordable housing regulations.

Lessons Learned

The City’s Condominium Conversion Ordinance successfully avoided the loss of a desired housing type in the community and was not an impediment to the developer achieving their goals to increase the value of the property.

Key Considerations

Define that the conversion of an apartment to a condominium includes redevelopment (removal and replacement).
Determine a sufficiently low rental unit vacancy rate to trigger the conversion potential.