Coops & Condos

Co-ops (short for "cooperatives") are apartment buildings owned by a corporation. Technically they are not classed as real estate. Individual tenants do not own their apartments in exactly the same way that they would a single family home, Instead they own shares of stock in the corporation. These shares are apportioned based on the size and floor level of their apartment, and ownership is established by a stock certificate and occupancy is governed by a "proprietary lease". The corporation pays all real estate taxes, maintenance expenses, and the underlying mortgage on the building. The amount a shareholder pays towards these expenses is directly related to the number of shares she owns in the corporation.

Today’s coops own the entire building, rather than individual apartments. Boards have the right to reject any borrower who they think does not qualify, however they wish to define qualification.

· A great deal of coops were built as rental buildings

· When a landlord made the decision to sell off the units, the most common way to do so was convert to coops

· Income: some coops have rental income coming from retail or commercial spaces on the ground floor that the coop can take advantage of.

Condos

The first thing to know before buying is that a condominium is real estate, real property – just like a home or other piece of property – and laws that apply to real estate sales, taxes and financing generally apply to condos.

In New York City, each condo apartment in a multi-unit building has its own tax lot and block number. Areas not part of a particular apartment – like the lobby, hallways, laundry and utility rooms, outdoor areas and the land the building is on – are called common elements.

Typically, each unit owner owns a specified percentage of the common elements. As a result, the entire property is owned, collectively, by the unit owners. In addition, the unit owners collectively pay the building’s operating expenses through monthly common charges. Each owner is responsible for his or her own real estate taxes.

When a building is converted to or constructed as a condo, the owner or developer must file an offering plan with the state attorney general’s office giving the details of how the condo will operate. Other documents that establish how the condo is run include the condominium declaration and bylaws. The declaration will specify the percentage of common elements assigned to each apartment. It will also contain details of just where an apartment ends and the common elements begin.

In some condominiums, the unit owner owns the surface of the interior walls and the space that surface encloses. In others, the unit extends to the center of the demising walls – that is, walls separating two apartments — and to the center of any exterior walls.

Under the bylaws, condos are run by a board of managers elected by the unit owners at an annual meeting. In some condos, each unit gets one vote; in others, the number of votes may be determined by the percentage of common elements owned, which is determined by a variety of factors, including the size of the apartment, its value or its location. (Common charges are typically based on the percentage of common elements owned.)

A significant issue in recent years was whether board members can be held personally liable for good-faith actions in performing their duties. At least one appeals court has ruled, basically, that they cannot. Issues that have not been definitively resolved by the courts include whether a condo association can impose a "flip tax" – a fee paid by the seller when an apartment is sold.