Purchasing a Condominium or Co-Op
What are Condominiums and Co-Ops?
People have begun purchasing condominiums and co-ops as alternative forms of real estate investment. Due to factors such as ease of transaction, prime locations, and affordability, condominiums and cooperatives present buyers and renters with many convenient advantages. However, many people actually don’t know the differences between the two, since they can be very similar.
How are Condominiums and Co-ops Different?
In condominium communities, people can own their own units, and maintain legal title to individual condo units. They may share obligations and ownership in common areas and air spaces, but they are usually granted title to their own living unit. Condominium boards and associations don’t actually own the living areas.
In contrast, an association or corporation usually owns the land and the building in a cooperative community. Individuals usually pay for rent and may make contributions for basic repairs in common areas. Basically, the association acts as landlord, while the persons living there area subject to monthly rental payments.
Thus, purchasing a condominium usually involves the sale of an individual unit; on the other hand “purchasing” a co-op usually refers to a corporation or organization that invests in the entire building complex.
What are Some Tips When Purchasing a Condominium or Co-Op?
If you are interested in purchasing a condo unit, or investing in a co-op community, you should take note of the following tips:
- Inquire and research as to whether there are any outstanding legal claims or lawsuits involving the building(s). These can seriously hamper your ability to invest in such properties.
- Learn about the basic characteristics of the development, such as the ratio of renters to owners, unit sales histories, and maintenance fees
- Also learn about the characteristics of the managing association, including budgets and financing, bylaws, etc.
- If necessary, hire an appraiser or inspector to verify the structural condition of the units
Lastly, much can be learned by speaking with current and former members, who can inform you of the smaller details regarding the operation of the community. Remember, factors such as bylaws that are too strict can affect the overall attractiveness of the compound.
Do I Need a Lawyer for Help When Purchasing a Condominium or Co-Op?
Purchasing a condominium or co-op can be exciting. At the same time, there will be several different legal aspects and issues to consider. If you’re thinking about purchasing a condominium or co-op, it’s essential that you hire a real estate lawyer for advice and guidance. Your attorney can help discuss the condominium and co-op laws in your area, and can also be on hand to represent you in court if a lawsuit arises.
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Last Modified: 07-20-2012 02:38 PM PDT
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