Egen Warner

The differences between of Co-Ops and Condos

Series 1

This blog will be in Multiple parts

I have heard the argument over and over again.  “Condos are better than coops” or “Co-ops are better than condos.”   The answer to this great debate is fairly simple.  Do you know the difference between the two?

Some people would say “yes I do”, some will say “I think I do” others will say “I am not sure but my friend or co-worker or family member said that……….” I always say, an informed buyer is a prepared buyer; a prepared buyer is a strong buyer a strong buyer gets good deals.  So if you have been asking yourself these questions; should I buy a coop or condo?  Start here:

I will try and break this down for you as I do when I have my buyer seminars and when I meet with my coop/condo buyer. 

What’s a Condo or Condominiums?

Definition:

Individual ownership of a portion of a building, complex or town house, with common areas shared by all owners. Maintenance fees called "Common Charges" are paid to the condominium association to maintain, repair, or improve the property.

Steps of ownership for a Condo:

o     A Deed is recorded and property is owned and transferred as you would a house.

o     Board approval is usually not required 98% chance of no board approval.

o     Common charge is for the maintenance of the “common” areas of the condo.  This fee is not tax deductable

o     Real estate taxes are completely different payments from the Common Charge  *Star program can be filed for on Condos

o     Prospectus /Offering Plan and Amendments contains all of the updates and amendments pertaining to the condo, most include the house rules

o     Management Companies are hired to run the everyday activities of the condo. They also enforce the rules of the cooperative.

o     Closings are generally as simple as a home purchase.

o     Condos are usually 2 or 3 times the amount of coop

o     Renting is usually not restricted

What’s a Coop?

Definition:

A co-op is a housing community that is jointly owned and managed by those who live in it. Each member purchases shares in this community, attends regular meetings to discuss maintenance, social events, or other community matters, and helps run the co-op. Members can participate in specific committees or become board members.

Steps of ownership for a Co-op:

o     You own shares in the corporation, which comes with the unit.  You sign a proprietary lease which has all legal terms of how the unit should be occupied.

o     Board approval:  Some coop requires a board approval. The Co-op boards are a group of shareholders/residents “owners” that are appointed by the other shareholders/residents “owners.”  They meet with you and either accept or deny your application. Fees vary from complex to complex.

o     Monthly Maintenance is paid to maintain all common areas of the complex.  Real Estate taxes are included in the monthly maintenance.   Purchasers  can apply for a yearly*star reduction off there monthly maintenance   

o     Prospectus /Offering Plan and Amendments contains all of the updates and amendments to the coop, most include the house rules

o     Management Companies are hired to run the everyday activities of the coop. They also enforce the rules of the cooperative.

o     Coops have there own financial guidelines that will vary.

o     Coops sales have flip tax or transfer fees that are usual paid by the seller.

o     Renting rules are regulated by the board usually to maintain the value of other units. Some restrictions may apply.  For example: The owner must reside in there unit 2 or 3 years and allowed to rent for 1or 2 years.

Please feel Free to leave any comments or any feedback.  Part 2 will get into more details of this particular controversy. “Should I buy a Coop” or “Should I buy a Condo?”

* What is STAR?

The School Tax Relief (STAR) Program, which became law in 1997, provides a partial exemption from school property taxes for owner occupied, primary residences such as one, two and three family houses, condominiums, cooperative apartments, and manufactured homes (also known as mobile homes in Real Property Tax Law).