Condominiums and Co Ops
Condominiums and cooperatives are what is known as mutual interest communities. In such communities, each resident rents or owns a residential unit, comprising a complex of units that are part of a larger building or buildings, and owned by a separate entity (such as a corporation). A condo is a private residence in a multi unit structure that includes ownership of commonly used property. A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit. While a condo owner owns a unit, a co-op owner does not own the unit but rather shares in a corporation. In short, the difference between the two is that in condominium communities, the units are purchased and owned by the residents while in cooperatives, the land/buildings are owned by a single separate entity that leases out the properties.
In terms of legality, condominium sales are treated similar to residential home sales; the buyer secures a deed of trust and, on the day of purchase, signs an actual deed for the unit. However, a condominium deed does not entail the same level of ownership that a deed to a house would provide. All the buyer really owns is the space within the unit. Because the common space of the condominium is mutually held by all the residents, they are restricted from making any renovations outside, even beneficial ones. For example, a condominium owner may renovate indoors by installing new fixtures, tearing out non-supporting walls, or installing a new kitchen or bathroom. These renovations may require condo board approval. That same owner is likely prohibited from doing any exterior painting or doing gardening outdoors. In some complexes, property may be set aside for this purpose, but even still any plantings must conform with the overall character of the development. In an attempt to maintain uniform appearance to the outside world, many condos even limit the type of window coverings that are allowed.
Held and Hines recommends that those interested in condominium or cooperative living take the following precautions prior to signing:
- Ask about the financial standing of the association/corporation that manages the property. This may entail requesting information on the latest financial statements and budgets. Other relevant information includes the ratio of owners to renters, the stability of the maintenance or common charge fees, and recent unit sales.
- Find out if there are any pending lawsuits against the development. Builders, neighbors, and even former owners might have filed suit. If anyone did, find out why and find out the outcome.
- Review the bylaws and the restrictions. If they are particularly strict, prospective buyers may not wish to purchase a home there. Even if they have no trouble with the restrictions, potential subsequent buyers might when it comes time to sell later on.
- Hire an inspector to check the structural condition of the building and unit (including electrical, heat, and plumbing). They should inquire about the condition of the roof and the common areas.
- Speak with current or former owners if possible. They may be able to find out from the owners what are the pros and cons of the condominium or Co op in question.
- Review minutes of the association or board meetings for the past two or three years to determine matters of concern to the community and assess how well the organization is operating.
- Visit the prospective building at various times of the day and night to determine the level of noise and activity. A wise buyer will become aware of potential noisy neighbors or other issues prior to moving in.
- Check the policies on pets and renting, if those are relevant to you.
- Visit the common area for a gym, laundry room or swimming pool at time of peak use, if there is one.
- Get condo or co op insurance to cover the interior of the unit.
If you or someone you love have found yourself in a dispute with your condominium, cooperative, homeowners’ association, neighbor, property manager, or landlord, the legal experts at Held and Hines are here to help. No matter the nature of your condominium/cooperatives dispute, we at Held and Hines have the passion and experience to provide you with a strong legal advocate on highly nuanced legal matters.
For excellence without compromise and unmatched legal expertise, contact Held and Hines today.
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