Creating Vertical Subdivisions for Fun and Profit

Vertical subdivisions are when separate parcels with different uses are stacked on top of each other in one building. They are becoming more common in Florida as the state gets more urban. Developers might choose this type of project because it can make the different parts more valuable when they are all put together. For example, a building with both a hotel and residential units could be more valuable because residents could use hotel services and the hotel could benefit from having convenient accommodations for the residents. There are some legal questions about whether slices of airspace can be sold separately, but title companies will usually insure an interest in airspace. In Florida, condos can be created in the air, with each unit being a parcel of airspace. This can be done by either creating legal descriptions with elevations or by setting up a condominium regime. With vertical subdivisions, there are different ways of dividing the airspace, and certain legal documents need to be put in place to make sure the building functions as a whole. This can be called a “fee simple vertical subdivision” or a “FSVS.” The Florida Condominium Act allows for this type of subdivision, and it can be used for mixed-use condos or master condos with separate units. A residential building with stores on the first floor can be divided into separate units. Each unit will have a share in the building and will have to pay for its share of the building’s upkeep. This is a simple and common way to divide a building. One way to structure a mixed-use building is to have one condo association for the whole building, with the residential unit owners in charge. Another way is to create a master condo, where the building is divided into separate parts, like office units and residential units. This has the advantage of following specific laws, but it also has drawbacks, like being restricted by condo rules. It may also make it harder to get a well-known hotel to be part of the project. Fee Simple Vertical Subdivision (FSVS) is a legal structure for buildings that allows for different parts of the building to be owned and operated separately. This gives a lot of flexibility in how the building is used, but also requires careful planning to make sure everything runs smoothly. In Florida, FSVSs are usually created through a declaration, not a condominium, to avoid certain legal requirements. One part of the building, like a hotel or office, usually runs the whole building and makes sure everyone pays their fair share for things like maintenance and repairs. When it comes to real estate taxes for a building with separate ownership, the tax assessor may not give separate tax bills for each part of the building. This can cause problems in figuring out who owes what and can make it hard to get financing. One way to deal with this is to draw the parcels in a lollipop shape, including some of the ground area. But it’s important to check with the property appraiser first to see if this will work. Other things that need to be addressed in creating the FSVS are easements, which are permissions for the airspace parcels to use certain parts of the building. When planning a multi-use building, it’s important to think about things like parking, trash, and maintenance. Each component of the building, like the residential units or the hotel, needs to have its own parking and trash area. They also need to figure out how to share things like loading docks and utilities. It’s also important to think about who will manage the building and how costs will be divided. If these things aren’t planned out carefully, it could cause a lot of problems for the building in the future. So, it’s important to make sure all these details are worked out before the building is finished. This article discusses the different types of structures for condominium developments and the legal considerations associated with them.

Source: https://www.floridabar.org/the-florida-bar-journal/creating-vertical-subdivisions-for-fun-and-profit/