We recently represented a developer attempting to convert an existing multi-family property to the condominium form of ownership. Although the developer proposed no physical change to the property, the Department of Environmental Services considers a condominium conversion to be a subdivision. Thus, the developer must comply with DES Subsurface Bureau regulations.
A year before making application to DES, the developer had replaced the existing sub-standard septic system with a DES approved system for the multi-family use. In the prior application, the minimum lot size calculation for the system was determined based on residential use which allowed to developer the benefit of a reduction in the minimum lot size. Initially, DES took the position that converting to condominium was a commercial use and thus, the minimum lot size reduction is not available. Without the reduction, the property was too small to support the system.
After a hearing before the commissioner, the commissioner interpreted the condominium conversion rules differently. Under the rules, the developer must only establish at the time of the subdivision application that the existing system meets appropriate design standards. This is done by citing an existing DES approval. If the system was approved and built in accordance with the approved design, the minimum lot size requirement at the time of the condominium conversion has no bearing on the decision. According to the commissioner, the minimum lot size calculation is “not legally relevant to its review.” The State missed its opportunity to appeal the decision.