December 21, 1981

Mr. Jack Burchill
Executive Secretary 
South Dakota Real Estate Board 
Post Office Box 490 
Pierre, South Dakota 57501

Official Opinion No. 81-50

Application of SDCL 43-15A to 'Townhouse'

Dear Mr. Burchill:

You have requested an official opinion from this office in regard to the following factual situation:

FACTS: 

Townhouses and condominiums are two separate concepts.  In a condominium, each dwelling unit owner owns as his separate property the cubicle of air space that his unit occupies.  This is the space lying between the floor and the ceiling.  The remainder of the building and the land are owned jointly by the owners as a group as common area. 

A townhouse on the other hand combines features of a house and a condominium.  The owner enjoys the separate ownership of his dwelling and the land immediately beneath the building, plus joint ownership of the common areas surrounding the dwelling units. 

Yet, townhouse and condominium projects are similar in many respects.  They both involve common area owned and maintained by a unit owners association. Both townhouses and condominiums involve a transfer of control from the developer to the unit owner.  The protection offered to consumers by the full disclosure requirements of the Condominium Act is equally beneficial to both the buyers of condominiums and townhouses.  The problem faced by the Board is even though townhouses and condominiums are quite similar, the term townhouse is not mentioned anywhere in the Condominium Act.  The Board is not certain whether it can regulate townhouses under the existing Condominium statute.

Based on the above facts, you have asked the following questions:

QUESTIONS: 

1.  Does the definition of condominium as stated in SDCL 43-15A-2 include the townhouse concept? 

2.  Can the South Dakota Real Estate Board regulate townhouses under the authority of SDCL 43-15A?

IN RE QUESTION NO. 1:

The entire chapter 43-15A speaks of condominium projects. Unless a project or mechanism would be contained in the definition of condominium as set out in 43- 15A-2, the development or project would not be regulated by chapter 43-15A.

SDCL 43-15A-2 reads as follows: 

'Condominium,' as used in this chapter, unless the context otherwise requires, shall mean an estate in real property consisting of an undivided interest in portions of a parcel of real property together with a separate interest in space in a residential, industrial, or commercial building or industrial and commercial building on such real property, such as, but not restricted to, an apartment, office or store.  A condominium may include in  addition a separate interest in other portions of real property.  Such estate may, with respect to the duration of its enjoyment, be either an estate of inheritance or perpetual estate, an estate for life, or an estate for years.

The only real estate mechanism covered is 'an estate in real property consisting of an undivided interest in portions of a parcel of real property together with a separate interest in space in a residential, industrial, or commercial building or industrial and commercial building on such property, such as, but not restricted to, an apartment, office or store.'  The sentence 'a condominium may include in addition a separate interest in other portions of real property' is not triggered until the first requirement, an undivided interest in real estate with a separate interest in space in a building on the real property, is met.  Townhouses as described in your statement do not fall within SDCL 43-15A-2.  It is my opinion townhouses as described are not covered by 43-15A.

IN RE QUESTION NO. 2:

In view of my answer to Question No. 1, the answer to your Question No. 2 is NO.

Respectfully submitted,

Mark V. Meierhenry
Attorney General