Condominium vs. Co-operative: What’s the Difference?

 Being a homeowner can be irksome and can take the fun out of homeownership itself.  If that’s the case, it might be time to make a move to either a condominium (condo) or co-operative (co-op).

 Condos and co-ops offer the benefit of not having to handle all of the routine upkeep you get in a house, but, as with everything in life, there a pros and cons to both.

 What is a co-op?

 First, please understand that co-ops are unique as far as ownership is concerned. Co-ops are different from condominiums and other residential arrangements because they aren’t considered “real property.” They are “interests in real property.” When you buy into a co-op you are buying shares in a corporation which owns the land and building.  You ownership in the co-op corporation entitles you to an apartment or unit usually embodied in a proprietary lease. But that’s not the only difference between a co-op and condo.

 The basic differences:

 Ownership

 Condo: Buying a condo means you own the real estate, including an interest in common areas.  Those common areas can be lawns, the swimming pool, or the parking garage.  There is no approval process when you buy your condo, and you don’t get a chance to pick your neighbors.

 Co-op: When you buy into a co-op apartment, you’re buying shares that entitle you to a portion of the building. A co-op board will have to approve you in as a new owner.  Proceedings, in the vast majority of cases are not subject review.  When you sell your co-op, the buyer has to go through the same procedures you did when you bought.

 Fees and expenses

 Condo: Condos charge maintenance fees, usually on a monthly basis. This covers maintenance costs for the building’s common areas.  They can include expenses ranging from lawn maintenance, pool upkeep, snow removal and certain routine maintenance that all buildings need.  See below about real estate taxes and mortgages.

 Co-op: Co-ops will also charge fees, but they are often higher in a co-op and sometimes include items like utilities. They will include a proportionate share of the building’s mortgage and real estate taxes.  See below.

 Keep in mind maintenance fees for condos and co-ops may increase over time.

 Cost

 Condo: Condos usually cost more to buy than a co-op, but you have more flexibility with your investment. It’s usually easier to sell or lease out a condo.

 Co-op: While co-ops will have higher fees, the initial cost of buying into a co-op is usually cheaper than a condo. However, it is almost impossible to rent out your co-op apartment.

 Property taxes

 Condo: Condos are individually owned, so owners are taxed separately just as they would be in a single-family home.

 Co-op: Co-ops are considered a single property, with a single property tax assessment that is split among the owners and usually included in the maintenance fee. Property taxes are typically lower on co-ops than on condos.

 Tax deductions

 Condo: If you own a condo, the mortgage interest and property/real estate taxes are deductible – just like a home.

 Co-op: Co-op residents can deduct their share of property taxes and mortgage interest.

 Disclaimer:

The information included is designed for informational purposes only. It is not legal, tax, financial or any other sort of advice, nor is it a substitute for such advice. The information may not apply to your specific situation. We have tried to make sure the information is accurate, but it could be outdated or even inaccurate in parts. It is the reader’s responsibility to comply with any applicable local, state, or federal regulations. Vested Land Services LLC and their employees make no warranties about the information nor guarantee of results, and they assume no liability in connection with the information provided. 

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

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Solar power, even apartment owners can benefit

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help.

We have previously looked at Solar Panels from a title insurance perspective and how they can impact the sale of your home.  I came across the below article in the New York Times on how solar panels can benefit those who live in apartment buildings.

Now Even Apartment Dwellers Can Use Solar Power 

More New York homeowners have tapped into solar power in recent years, as regulations have eased and prices have dropped. But apartment dwellers, for the most part, have been kept in the dark.

Starting this summer, though, renters and homeowners who live in buildings that don’t, or can’t, have solar panels on the roof can join something known as a community solar group. Simply put, these groups allow someone in a Manhattan apartment to lower their electricity bill by connecting to solar panels that happen to sit on the rooftop of, say, a Bronx warehouse.

“I think community solar gives equal access to solar power for those of us in the city,” said Taka Juba, an owner of a Manhattan condominium apartment, who joined the city’s first community solar group run by IPPsolar, a Manhattan-based solar firm. “Anything to offset your bill is great, but there’s a social and environmental impact too.”

To me, the implications are fascinating.  First, from a financial point of view, will the apartment owners benefit financially, and, second, from the title agent's point of view, how to create an agreement that doesn't tie up the title to the real estate.

You can read the full Times article here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

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Condo rules and regulations got you down? Too much or too little enforcement?

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help.

This is another great article from Realty Times.  It's all about enforcement of condominium and home owner association (HOA) rule and regulations.  Regulations? They range from flying Old Glory (a Federal law now protects condo unit owners) to young children in the swimming pool.  Each property is different.

Condominium Enforcement: Too Little Or Too Much?

BENNY L. KASS

Question:: I read and enjoyed a recent column that you wrote on condominium living, and especially the part where you said that "many people are becoming quite disillusioned with community association life." I fully expected you would then cover my problem, but you did not. You said people were unhappy with "enforcement, rules and regulations." Although I agree with you, the opposite is also true. I live in a condominium complex where there seems to be no rule enforcement. I have noisy neighbors, neighbors with three cars (for their two-person, one-bedroom condo), neighbors who erect anything and everything on the common elements. The Association does not have the will nor the resources to do anything about these qualities of life violations. The lack of enforcement of the various rules and regulations of my Condominium Association has prompted me to consider selling and moving out. Would appreciate your comments. Sharon.
Answer: Serving as a member of a board of directors of a community association is, to say the least, a very difficult task. You are "damned if you do, and damned if you don't." All too often, competent, responsive boards of directors are faced with a difficult decision -- namely do we enforce our rules or can we ignore some of the minor violations that occur within the community?
More importantly, many boards of directors do not have the resources -- both legal and money -- to properly enforce any violation of the rules and regulations.
Almost every set of community association documents authorizes a board of directors to enforce their own documents. A board can enforce in a number of ways.

To read the complete article go here.

For your next title insurance order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

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Picture Perfect HOA Reserves - Realty Times

HOA Reserves.

Do you own a home in a condominium or planned development with an association?  The financial health of your association is crucial.  This article from Realty Times give you a good understanding of the importance of a reserve account.

A reserve study identifies a homeowner association's future repairs and replacements like a snapshot in time. Imagine that you could picture the buildings and grounds as they would be in five, ten, even thirty years. A reserve study acts just like that by estimating the useful life of the common elements and the cost to replace them in the future based on current cost adjusted by inflation.

Read the full article at Realty Times

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. Located in Fairfield, #NewJersey, we are the title insurance agent that does it all for you.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Condo and Coop - what's the difference between them

Cooperatives and Condominiums, Coop or Condo, they go by several names, is a legal form of property ownership with big differences between them.  Here's an informative article from Realty Times that you can fnd here.  Abstracts follow.

The general public often confuses condominiums with cooperatives. In reality, as far as living standards go, there are few differences. However, from a legal - and financing - point of view, there are major differences.

There are many definitions of cooperatives, but the one I like best is that a cooperative is a multi-unit apartment building, in which each resident has an interest in the entire building, and a lease (or contract or share of stock) enabling the owner to occupy a particular apartment unit within the building.

If you own a condominium, you actually own your entire apartment, as well as a percentage of the common areas (called the "common elements"). A cooperative owner -often called a shareholder -- does not own the unit. In fact, you could call such owner a "tenant".

Perhaps the most important distinction between a condominium and a cooperative is that most cooperative associations require that a prospective purchaser be approved by a membership committee comprised of current cooperative owners.

Remember that each state has different regulatory laws for coops and condos.  Before purchasing either, we recommend that you consult an attorney with real estate experience.

For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us. We can help. We are the title insurance agent that does it all for you.
 

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Getting a mortgage will be a bit harder

Realty Times reports: "Fannie Mae Tightens Underwriting Rules for Condo, Refinance Loans, Borderline Borrowers" by Shashank Shekhar.

Fannie Mae is putting the squeeze on underwriting guidelines this fall, making it tougher for some condo, borderline and refinancing borrowers to land a home loan.

Effective Oct. 20, 2012, the stricter rules are designed to reduce Fannie Mae's ever growing exposure to risk. They will also force more borrowers to shop around.

Here are some highlights:

Condominium Loan Documentation – Right now with less than 10 percent down, condo buyers need to complete a two-page condo questionnaire about the homeowner association's financials and provide additional documents including a reserve study, by-laws and a copy of the master insurance policy.

The documents are readily available from the homeowners association, but with Fannie Mae lenders pouring over more documents, there's a greater chance more loans could be denied for failing to meet Fannie Mae's condo loan underwriting criteria.

End of Discretionary Approvals – Discretionary approvals, also called "Expanded Approvals (EAs)" will end for all Fannie Mae refinances, except Fannie Mae's Refi Plus Program loans, also called HARP (Home Affordable Refinance Program) loans.

Self-Employed Borrowers – Fannie Mae will require self-employed borrowers seek a loan to provide two consecutive years of federal tax returns, instead of the current one year tax return requirement for some returns.

Because of the new two-year average approach, one bad year out of two could sink a self-employed homeowner's application even if the most recent year would have qualified him or her under the old rules.

Maximum LTV Reduction for Adjustable Rate Mortgages (ARM) – The current LTV allowed for ARM home purchases and refinances, 97 percent, will be reduced to 90 percent.

You can read the full article here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow AT vested.com

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Guidelines for condos could slow market

While it may seem simple to buy a condominium unit, government guidelines are actually making it harder to get mortgage financing reports the New York Times.

Stricter guidelines that govern which buildings are approved for conventional mortgages — rolled out by three government agencies in stages since December 2008 — are locking out thousands of buildings nationwide. States like Florida and Arizona are especially hard hit; mortgage brokers say that some buildings in the New York area have also been affected.

The guidelines and approvals come from Fannie Mae, the buyer of home mortgages; Freddie Mac, its smaller competitor; and the Federal Housing Administration, which insures loans. The rules were meant to help strengthen their balance sheets as they faced a surge of loan defaults in the condo market.

Condominium associations are being called upon more frequently to open their books to Fannie Mae, Freddie Mac and the FHA.

For instance:

Condo associations are required to set aside 10 percent of their budgets for maintenance and “reserves”; and new developments are ineligible for Fannie-backed financing unless 70 percent of their units have sold or are under contract (the threshold used to be 51 percent). Freddie Mac adopted similar guidelines last year.

Waivers are available but none are sure things. Fannie Mae does have a website that lists approvals as does FHA.

Read the full report, Stricter Lending Guidelines for Condos

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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