Top Problems With Converting Historic Landmarks Into Condos

Investing in historic condo buildings has many advantages and some downsides. While these properties are appreciated for their intrinsic value, cost-effectiveness, and environmental friendliness, property owners will likely encounter challenges like construction and permit delays, financial constraints, and structural challenges.

Understanding your rights under contracts, statutes, and case law is vital to protect your interests. Partnering with a knowledgeable attorney can reduce or potentially eliminate those risks.

Should You Renovate a Historic Building for Condo Use?

Historic building restoration is attractive to most property owners and investors for the following reasons:

1. Intrinsic Value

Restoring historic buildings is valuable to connecting the past to the present. They are evidence of decades or centuries of history and offer a sense of culture in the community. Although the building might have served a different purpose in the past, such as an office complex or library, converting it into a condo helps you maintain the building’s function while retaining its aesthetic and cultural value.

Historic buildings are sometimes worth more than newly built properties and have unique architectural designs. The material quality in some of these buildings can be even higher than the materials used in modern properties. These old materials can also be rare or no longer exist. Some people may pay more for the experience or uniqueness of the property.

2. Modern Convenience

With the right contractor, you can add modern features such as plumbing, HVAC, updated flooring, and electricity without destroying significant portions of the original building design. Combining modern elements with a stunning historic design can produce a unique result. This makes your building stand out while ensuring convenience and safety.

3. Cost Effective

Converting historic buildings into condominium units can save more money than starting from scratch, especially when the building has structures you can retain. You spend less money on materials, labor, and energy.

In addition to demolition costs, building new facilities means losing the property’s unique characteristics, which you may want to avoid. You may also be able to bypass some expenses associated with zoning requirements and utility connections by taking this approach.

4. Environmental Friendly

Historic building restoration is an environmentally friendly way to own a new condo property. It reduces material and energy waste and limits suburban sprawl and environmental degradation.

You can restore an already-existing property with history, value, and meaning without demolishing or spending money on tons of materials. You also can give the property a facelift while making it energy-efficient and increasing its value.

Common Setbacks When Converting a Historic Building

Converting historic buildings into condos may come with challenges. Here are four examples:

1. Construction Delays

Construction delays exist for standard condo projects, and historic building restorations often endure the same fate. Converting historic buildings into condominium units requires special skills, which means hiring the right contractors. Yet, some of these projects drag on longer than expected due to complexity, inadequate communication and planning, budget conflicts, and poorly defined work scope. This causes inconvenience for the project owner and residents ready to use the property.

Property owners can protect their interests with detailed contracts that thoroughly lay out the scope of the work and remedies for setbacks or breaches. While this may not eliminate delays, a well-written contract can allow you to access legal or equitable remedies like specific performance and damages in the event of a breach or insurmountable conflict that arises during the project.

2. Permit Delays

Federal and local governments designate areas as historic districts, but local designations have the most restrictions since they control the building and zoning codes.

In most local historic districts, you need permission from preservation boards to make exterior alterations to the structures or demolish them. Additionally, the changes must be consistent with the district’s historic character and overall building requirements of the area. These result in permit delays, which can worsen when contractors submit wrong or incomplete plans.

Before choosing a contractor, it’s essential to ensure they have experience constructing historic condo buildings and a track record of complying with building codes.

3. Financial Constraints

Budget deficits and unexpected rises in material and labor costs can stall construction projects, so you must plan accordingly. Many property owners underestimate the cost of restoring historic buildings and realize midway that they need more funds. While historic building renovations are generally cost-effective, improper forecasting can create inconveniences along the way.

You should hire a professional to provide accurate estimates and leverage government incentives to avoid such challenges. For example, the Federal Historic Preservation Tax Incentives program encourages private sector investment in rehabilitating and reusing historic buildings by providing up to 20% federal tax credit on applicable structures. You can qualify if you meet the Standards for Rehabilitation codified in 36 CFR Part 67.

4. Structural Challenges

A crucial determinant of reuse success is the building’s structural integrity. Any adaptive reuse or repurposed building requires a proactive assessment of the structure. Will there be a need for structural modifications? Are openings and penetrations necessary? Will mechanical systems force structural alterations?

Typically, historic buildings are designed to meet the building codes at the time of construction. Since these codes only certify the minimum safety requirements, repurposing the building requires you to conduct a structural analysis of the strength of the existing material for the new use.

In addition, you may need to address things like electrical faults, ventilation, excess moisture, pests, leaks, and cracks. These changes usually require structural strengthening solutions and compliance with regulatory standards, especially if you want to benefit from tax incentives or avoid issues with zoning and building authorities.

When contractors deliver below the agreed standard, you may have rights under the contract or case law to recover damages or compel them to complete the project as agreed. It’s advisable to consult a legal professional to assess your rights and to ensure you’re compliant — being non-compliant with the proper standard(s) can open the owner to liability.

Relevant Historic Building Preservation Laws in Massachusetts

Here are a few examples of historic building preservation laws in Massachusetts:

• The National Historic Preservation Act of 1966: Historic building restoration projects that require licenses, permits, or funding from federal agencies are reviewed in compliance with Section 106 of the Act. The review follows a specific process guided by 36 CFR 800. The Massachusetts Historical Commission (MHC), specifically the Massachusetts State Historic Preservation Officer (SHPO), reviews the procedures in Massachusetts.
• Massachusetts General Laws Chapter 9: In Massachusetts, the MHC must review historic building restoration projects that require licenses, permits, or funding from any state agency in compliance with Chapter 9 Sections 26 to 27 C of the Massachusetts General Laws. The law establishes the MHC, the State Register of Historic Places, and the Office of the State Archaeologist, among other historic preservation programs.
• The Massachusetts Environmental Policy Act (MEPA): MEPA regulations direct state agencies to consider environmental considerations, including historic properties, when taking action. 
• Massachusetts State Building Code: The state building code requires buildings that qualify as partially or totally preserved historic buildings to meet the requirements under 780 CMR 3409.0. Property owners are not obligated to apply, but the law preempts all other regulations of 780 CMR governing the renovation, reconstruction, change of use, and occupancy of historic buildings.

How to Handle Historic Building Renovation Disputes

What should you do if a dispute arises during your historic building renovation? Here are a few tips and different ways you can approach this situation:

• Know your contract: Understanding the terms of your agreements helps you avoid disputes and defend yourself when they arise. When drafting contracts, be sure to use straightforward language to express your intentions.
• Consider alternative dispute resolution (ADR): Litigation can take months or years to resolve, which you may want to avoid. Alternative dispute mechanisms like mediation, where an impartial third party helps resolve the conflict, are faster and less hostile options. You may insert a clause in the primary contract or agree with the other party to resort to ADR when the dispute arises.
• Sue in court: When ADR is impractical or impossible, litigation can help you if you have a valid claim. Litigation is an effective tool for resolving construction disputes.
• Document everything: Keep all paperwork safe and take account of construction activities. Take pictures and videos because you may need them when proving a fact.
• Partner with an experienced attorney: Because construction disputes are common, it helps to hire a lawyer for guidance and representation. Many people wait until matters get out of hand, making the case even more challenging. An attorney may be able to help you resolve conflicts before they escalate or go to litigation.

Contact Calabrese Law Associates for Legal Help

The team at Calabrese Law Associates are experienced construction and condominium law professionals based in Massachusetts. We help property owners through various contract and construction disputes by thoroughly assessing their needs and providing personalized services. Contact us now if you need help resolving your legal challenges.

This publication and its contents are not to be construed as legal advice nor a recommendation to you as to how to proceed. Please consult with a local licensed attorney directly before taking any action that could have legal consequences. This publication and its content do not create an attorney-client relationship and are being provided for general informational purposes only.

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