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January 21, 2019

Conversion


Word of the day

Conversion

1.    The process of transforming an income-producing property, such as a rental apartment building or hotel, into condominium apartments for sale to separate owners. The building is often renovated, the existing leases are allowed to lapse or are terminated, and the project is registered with the proper state agency and the title brought under the condominium act. The process requires considerable expertise in each of the following stages: cost and market analysis, purchase, initial remodeling, appraisal, interim and long-term financing, tenant relocation, and sales. State law often requires the developer to give existing tenants a long period in which to relocate if they elect not to purchase their unit. Due to increased construction costs, many developers are exploring condominium conversion as the answer to housing shortages. Yet, because of tenant displacement problems, many communities have placed restrictions (and even moratoriums) on condominium conversions.

2.    The appropriation of property belonging to another. The conversion may be illegal (as when a broker misappropriates client funds), or it may be legal (as when the government condemns property under the right of eminent domain). 

3.    The process of converting from one use to another for tax purposes, for example, changing a personal residence into a rental property
 

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