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Condominium and Cooperative
Ownership Comparison
Condominiums
Condo owners have full ownership rights to the inside space of their apartments. They do not have to get permission to make minor changes inside their apartment unless the alteration affects the common areas. But any changes outside of their area or that affect others must be approved by a majority of the condo unit owners.
The walls, floors, or ceilings of the apartments, as well as the lobby, basement and other areas shared by all of the owners and are the common areas. These areas are required for the operation of the building and must therefor be jointly owned and under direct control of the homeowner's association. Each unit owner owns proportional part of these areas. For purposes of assessments and voting rights in the homeowners' association the proportional ownership is determined by calculating the value of each unit and its relation to the total value of all units. Thus if a unit is worth 1% of the total value of the building the owner of that unit will have 1% of the voting rights and will be assessed 1% of all expenses. The proportional value of each unit may be determined simply by size, by market value or by a combination of both.
Management
Condominiums are managed by a homeowner's association in accordance with the by-laws of the organization
Financing
Each unit in a condominium is a parcel of real estate and is financed by the owner of the unit.
Real Estate Taxes
Condominiums are assessed as individual units and taxes are generally higher than in comparable co-op units.
Personal Taxes
Interest and real estate taxes paid by unit owners are deductible in the same manner as interest and taxes on a house.
Cooperatives
Co-op owners own shares in the nonprofit organization that owns the building their unit is in. The number of shares assigned to a unit is determined by the unit's size or value. Owners' voting rights and assessments are in turn determined by the number of shares they own. The number of shares allocated to each apartment is specified in the offering plan.
The right of a shareholders to occupy their individual units as well as their obligations and privileges are granted in the form of long term leases. This lease may or may not grant the right to change the inside of a unit, if it does not permission must be requested from the co-op board. The lease is included in the offering plan
Management
Co-ops are operated according to their by-laws by homeowner's associations as are condos. However, because co-ops are operated as corporations, their board members are more difficult to remove and shareholders usually do not have the right to veto the action of the directors.
Financing
Co-op owners being shareholders and not owners of real estate, cannot get mortgage loans to finance their purchase of shares but can get personal loans.
Real Estate Taxes
Most states consider co-ops personal property and not real estate and assess the co-op building instead of the individual units. The resulting real estate taxes for co-op owners tend to be lower than that paid by owners of similar condominiums.
Personal Taxes
Co-ops, being nonprofit organizations, must rely on their tenant shareholders for payment of most of the cost of the operation of the building. The Internal Revenue Service requires that at least 80 percent of the income come from tenant shareholders and not investors or businesses. If a co-op violates the 80/20 rule, it could lose its status as residential property and the rights of its occupants to tax deductions for interest and real estate taxes.
Contact Fred for more information.
Delphi Real Estate
The oldest and largest real estate office on Garth Road.
Fred Nussen
Voice Mail / Direct:
914-725-8376
Mobile:
914-320-2639
E-mail:
fred@frednussen.com
Office:
Delphi Real Estate
36 Garth Road
Scarsdale, NY 10583
Phone: 914-723-8520
Fax: 914-723-8541
Copyright
2008 Delphi Real Estate
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