Co-op or Condo?
Condominiums:
Owner has a deed for unit, has a separate mortgage, pays
property tax on the unit plus a percentage of the common
areas and pays a monthly maintenance fee. A board of directors
governs the complex with the owner having one vote. The
condominium owner has a fee simple absolute unrestricted
ownership and is individually responsible for property
taxes and maintenance fees. Use the sales price of condominiums
with similar size, appeal, age, neighborhood, incurring
similar maintenance fees, etc. to determine market value.
Cooperatives: Most co-ops
are incorporated and a board of directors governs the
complex with the owner of each individual unit having
one vote. The owner has no deed, only stock and a proprietary
lease which has a term from 10-50 years renewable automatically
or at the discretion of the shareholders. He/she cannot
refinance his unit as a condo owner can. Mortgage, property
tax and maintenance fees are paid pro rata by the owner
according to the percentage of the overall size of the
unit. Property tax appeals involve the corporation and
the stockholders.
Areas for condo / co-op hombuyer to look into:
• Check out the by-laws, proposed by-laws, fees for maintenance of outside areas. See if you are allowed to make improvements in the condo's Declaration of Condominium document. See if the by-laws are to your liking. Look into the financial health of the condo by checking financial information listed under "reserve fund" to see if it is set up to cover for emergencies. Obtain a copy of the condo's current budget and study their financial statement so there will be no surprises.
• Get an Estoppel Certificate that will show if the current owner owes fees or if any liens against the condo exist. Owners can be evicted for nonpayment of fees.
• Obtain a Certificate of Insurance showing how much the condo board has purchased to cover damages to the common areas.
• Get a statement of the percentage of occupancy of the condominium complex. This may alert you to potential problems if the occupancy rate is low.
• Obtain a statement that spells out the use of recreational facilities as well as a drawing or photo of the unit's interior and recreational facilities. Get a list of improvements, if any, the developer agrees to make.
• Get a statement that spells out the monthly or yearly maintenance fees you are expected to pay.
• Obtain a Certificate of Title for your condo unit.
• If you decide to use a real estate agent, use the best Buyers Agent in your area. Not only do you get better results, but they give you better council - they know the ropes. They are good resources of local information for insurance, inspections, legal counsel, financing, etc. If you need to look into the difference between a Buyers Agent and a Sellers Agent Click here