What is a Condominium Property Regime in Hawaii

[Mark Guagliardo]

What is a Condominium Property Regime (CPR) in Hawaii

Condominium Property Regime (“CPR”) refers to the specific form of ownership and governing process created when real property becomes a condominium. 

The process of creating a condominium is often referred to as “CPRing” property.

CPR stands for Condominium Property Regime. One way to explain it is that it’s a way to subdivide land that the County in Hawaii wont allow, because of minimum zoned lot size in your area, example: You have a lot 6 acres in size in an area zoned 5 acres minimum and you would like to sell 2 acres, with a CPR you can divide up units of like a condo project.

Hence “condominium-izing” a property, a CPR.

Every unit (land area) is owned Fee Simple and you may, or may not have common elements. A CPR can have a common driveway that is shared between the 2 units. It can be decided to make it a gravel driveway to keep it low maintenance and not have to collect any maintenance fees. This CPR can have no “Association of Apartment Owners” (AOAO) also.

Your mortgage, taxes, and insurance are all assumed separately as well.

However, the County recognizes the entire lot and not the individual units that were created in the CPR process. So, lot coverage, building permits, etc. will be assessed as though it were the entire lot.

EXAMPLE
You own a home on 6 acres, you want to sell the bottom 3 acres, but you are in an area zoned for minimum size parcels of 5 Acres (Ag-5), if you create a CPR you can own your 3 acres Fee Simple and sell (or more correctly have someone join your CPR) and acquire the bottom 3 acres Fee Simple, each of your are responsible for own debt, taxes, mortgage, etc. on your own land parcel.

One of the biggest factors is I have to focus due diligence on is Water and how much the water supply can accommodate, ie. how many fixtures can be supplied, sinks, toilets, hose bibs, etc.

Here is a link to the County's form for calculation in Maui
http://www.co.maui.hi.us/DocumentCenter/Home/View/4609

When creating a CPR, you are considered a developer. There are specific laws that govern developers and you’ll want to know about that before marketing any property for sale. You’ll need to hire a a CPR expireinced attorney, a surveyor, and probably an architect to draw “As-Built’s. The cost of a CPR starts around $10,000-$12,000 and take somewhere around 4 months to complete. Ask your attorney for more info on the time frame. Every situation is different and rates do change. But they can do it all.

CPR’s are very common in Hawaii. It’s a good way to sell off a portion of a large lot and capitalize on the lots density. If you are allowed 3 houses, you could theoretically CPR it into 3 areas. BUT, there are further County and State limitations that affect CPR’s so you should ask your attorney to verify options available to you. For instance, if the lot is less than 20,000 sq ft., then you are only allowed one waste water system (septic, cesspool, etc.) which are engineered for 5 bedrooms, max. That means if you have 2 dwellings, one of them can be a 3 bedroom house, the other can only be a 2 bedroom house.

It’s important that when purchasing a house that is on a CPR’d lot that you use a Hawaii lender. Mainland lenders get confused by this and may not finance them. It can be confusing at first, but they provide unique opportunities for the right investor.