|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
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.