Hawaii Life Real Estate Brokers recently listed 71 Lahaole Place Unit 0002 in Wailuku on the island of Maui (MLS# 385876). This lot is in the Maluhia Country Ranches subdivision, which I confessed in a previous BLOG is my favorite subdivision on Maui. I own and live in Maluhia. The owner of 71 Lahaole Place created a condominium property regime (CPR) and is now selling off unit 0002. The questions most buyers have include, what is a CPR, what is included in unit 0002, and why would someone CPR a property? Let’s try to address these three questions.
Much of the information in this blog is based on a course given at the REALTOR Association of Maui, Condominium Property Regime Basics, created and presented by Jakob K. Wormser, Attorney at Law LLC. Thank you to Mr. Wormser for both the course and for giving me permission to use parts of his handout for this blog.
1. What is a Condominium Property Regime “CPR”?
“A CPR is a legal mechanism (Hawaii Revised Statuses 514B) for dividing a single property into 2 or more separate UNITS OF OWNERSHIP, typically with attached ‘appurtenant’ exclusive-use LIMITED COMMON ELEMENTS (yard areas).” Source: Condominium Property Regime Basics. I bet some of you said, so this is another way to subdivide a lot. “A CPR is NOT a Subdivision, because the underlying CPR property regime remains 1 SINGLE PARCEL for all State and County ZONING and BUILDING CODE purposes.” Source: Condominium Property Regime Basics. It is important to note that a CPR does NOT allow owners to build any additional buildings, structures, or improvements over what could have been built on the lot prior to the CPR being created. Since 71 Lahaole Place is zoned as agriculture, the total structures that can be built are the primary farm dwelling (aka main house), a secondary farm dwelling (limited to 1000 sq ft of living space, informally this is called the ohana), a detached garage and an ag building. The last two buildings are not to be inhabited.
2. What is included in unit 0002?
71 Lahaole Place Unit 0001 already has the main farm dwelling built. Unit 0002 has the rights to the secondary farm dwelling. Per the Maluhia CC&Rs, it must be a minimum of 500 sq ft, and per county code can not be more than 1000 sq ft of living space. Currently, there is no limit to the size of the covered lanai on ag land. There are some restrictions to shape of the lanai, so it is not counted as living space. The specific details are beyond the scope of the blog.
3. Why would someone CPR a property?
There are a number of reasons why someone would CPR a lot. In this blog I will focus on two common reasons; a full lot may be more than the owner needs, and selling two parts separately is likely to generate more revenue than selling the entire parcel as a whole. Ag lots per county code are a minimum of 2 acres. Some of you, like me, would want to keep your ag lot intact and enjoy all the possibility of having acreage. For some owners, 2+ acres is more than they need or want to take care of. An option for these owners is to CPR the lot and sell off a portion, thus giving them a smaller area to maintain. From a financial perspective, the other reason owners CPR properties is the parts are typically worth more than the whole. This is the case with 71 Lahaole. The owner built the main house and lived on the lot for more than 15 years. The owner’s life-plan evolved where his future was no longer on Maui. The owner CPRed the lot because he believed that the revenue generated by the two units would be greater than selling the entire parcel with the main house. The advantage for a buyer is this allows them to buy in a subdivision, such as Maluhia, at a significantly lower price than if they were to buy a full lot. In this sense, CPRing is a win-win for the seller and the buyer.
I hope that this introduction to CPRed lots is informative. In a future blog, I will drill down into some questions a buyer should get the answers to before deciding if owning a CPRed lot is the right decision.
In the meantime, if you would like to see this lot or any of the other lots that are available at Maluhia Country Ranches, or on Maui for that matter, please get in contact with me.
Roy Vandoorn RB-21017
Hawaii Life Real Estate Brokers