Contruction Today - July/August 2017 - 16
Esq., is a
partner in the
San Francisco office of
Cox, Castle & Nicholson
LLP. He focuses his practice on real estate sales,
finance and development,
with broad experience
in residential, commercial and mixed-use
development and master
He may be reached via
e-mail at pdubrasich@
nizational issues can become complex.
The differing interests of residential and
commercial owners can lead to conflicts
in management control, design review
of modifications, use restrictions and
association dues. Simple concepts like
the collection of reserves for future
capital replacements of common area
components - a legal requirement for
residential projects - can be a matter
of dissention simply because retail/
commercial owners often cannot pass
reserve contributions on to their tenants
as "CAM" charges.
In a single owners' association situation, consideration must be given to
which component controls a majority
of the board of directors. The governing
documents should provide that management decisions affecting solely the
commercial or residential component
should not be made without the approval of representatives of that component.
It is sometimes possible to segregate
commercial and residential operation
and management into separate owners'
associations, with a reciprocal easement
agreement or master association created
place to govern the management solely
of shared facilities. This often depends
on the design of the project and the legal
structure of the subdivision.
projects are essential to
revitalizing urban areas.
CONSTRUCTION-TODAY.COM JULY/AUGUST 2017
matter of parking is almost
always a concern in new mixeduse developments.
* Sales Regulation and Disclosures - In practice, commercial
and residential properties are marketed differently. They are
appraised by different methods, measured by different standards and sold under different types of sales contracts. Developers need to keep in mind, however, that mixed-use projects
are, for the most part, governed by residential common interest
development laws and regulations as if they were purely
residential. In many, if not most states, legal requirements for
selling residential lots or units in a common interest development, and laws regulating how common interest developments
are operated, apply equally to mixed-use developments.
'Every mixed-use project is different, designed to address the
From a risk management standpoint, builders of for-sale mixeduse projects should be vigilant about providing detailed project
disclosures, which highlight the benefits and challenges of living in
close quarters with other types of users and occupants.
Well-designed mixed-use projects are essential to the revitalization of urban areas. They can, on a large scale, create vibrant and
fulfilling living environments for both young and older residents.
The rewards can be maximized by developers paying close attention
to, and addressing in the design and legal governing documents,
the challenges associated with residential and commercial owners
existing in close proximity and sharing obligations of project maintenance, security and operation.