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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.

• Buy homeowners insurance. Typical costs are about $3.00 per $1,000 of appraised value.

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