Transcript Chapter 1 - OnCourse Publishing

New York Real Estate for
th
Salespersons, 5 e
By Marcia Darvin Spada
Cengage Learning
© 2013 All rights reserved.
Chapter 16 Condos and Coops
1
Chapter 16
Condominiums and
Cooperatives
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Chapter 16 Condos and Coops
2
Chapter 16 Key Terms
Alteration agreement
Condominium
Board package
Condop
Bylaws
Cooperative
Common elements
Covenants,
conditions, and
restrictions (CCRs)
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Chapter 16 Condos and Coops
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Chapter 16 Key Terms (continued)
 Declaration
 Maintenance
 Flip tax
statement
 Proprietary lease
 Recognition agreement
 Share loan
 Sponsor
 Offering plan or
 Flipping
 House rules
 Letter of intent
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Chapter 16 Condos and Coops
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Condos and Coops
Condo-title transferred by deed
Coop- title transferred through shares
of stock
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Chapter 16 Condos and Coops
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Cooperatives
A cooperative corporation usually owns the land,
buildings, and property rights and all interests
The title to the property, as shown on the deed, is
in the name of the corporation
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Chapter 16 Condos and Coops
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What are Shares of Stock?
The shareholders do
not own real estate,
but a proportionate
number of shares of
stock in a
cooperative
corporation
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Chapter 16 Condos and Coops
As lessees, the
shareholders pay
a monthly
maintenance feethe rent
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Key Issues to Review in a Co-op
Board’s Minutes
Maintenance and
Assessment History
 Many cooperative
Reserve
Fund
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Underlying
Mortgage
reserve funds receive
income from the flip
tax, a charge levied
when units change
hands
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Cooperative Board Application and
Interview Preparation
 Real Estate Example:
Before
Scheduling
Interview
Consider
Co-op
Interview
Board
Prep
Application
The Role
Of Time
Familiarize
Purchaser
Package for
Discussion
purposes
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Need for total
disclosure
By purchaser
During
Interview
Why?
Dr. Leslie is a single
woman who is paying
cash for a cooperative.
She has sizable and
safe investments and
no debt. The
cooperative board
refuses her. No reason
is given.
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CPS1 Phase: Cooperative
Policy Statement
• Sets out New York
Attorney General’s rules
• how a developer may
test market for a new
development before
filing the offering
plan and before
construction is
completed
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• The CPS1 period
• lasts 120 days from
acceptance of the
CPS1 statement by the
Attorney General
• can be extended by
request from the
developer for an
additional 60 days
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Documents Needed for the
Sale/Purchase of Cooperatives
Proprietary
Lease
Alteration
Agreements
House
Rules
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Stock
Certificate
Offering
Plan
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Primary Residency Versus
Subletting Issues In the Cooperative
Primary resident
 owner of the cooperative unit
Subletting
allows tenant shareholders more flexibility in ownership
board may limit the length of time a tenant shareholder can
sublet a unit
If the sponsor owns the shares allocated to the
apartment, he may be permitted under bylaws or rules
to sublet or rent a unit even though a unit owner
cannot
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Chapter 16 Condos and Coops
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Difference Between a Condop,
Condominium, and Cooperative Apartment
A condop is
 Real Estate Example: Why it is created?
a building that
Building owner Sal owns a multi-unit
includes
apartment building that includes a store
the street level. Sal records the
condominium and on
Declaration of Condominium, dividing
the property into two condominium
units: Condo A (the commercial unit) and
cooperative
Condo B (the residential unit). Sal
continues to own fee title to the
ownership
commercial condominium unit and
collects rent from the store. As fee title
in the same
owner to Condo B, Sal deeds the
residential unit to Big City Co-op Corp. in
exchange for the shares of Big City Co-op
structure
Corp. Various blocks of shares are
allocated to the different apartments. Sal
now sells the block of shares allocated to
each unit (together with a proprietary
lease) to individual purchases.
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Condominiums
A structure of two or more units
Interior space is individually owned
Common elements, are owned by owners of
the individual units
To create, the owner/developer of the
property signs a condominium declaration
Shareholder’s rights and obligations are in
the condominium’s bylaws
The sponsor is the owner or developer.
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Offering Plan
Size
of unit
The floor plans
The construction
The size and materials
The plans of recreation buildings
The make and model of appliances
The scope of the landscaping
The land on which condominium is located
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Offering Plan Amendment:
Building Conversion
 NYS law
 When a developer files an offering plan with the
Attorney General to convert an existing building to
a condo or co-op, the tenants have a 90-day
exclusive right to buy their apartment
 During this period sponsor cannot negotiate
separate prices
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Offering Plan Amendment :
New Development
o New building and after
90-day tenant’s
exclusive period in a
converted building
o sponsor can
separately negotiate
the price of a
particular
apartment
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Chapter 16 Condos and Coops
o The developer can
sell one apartment
for $200,000 and
then sell another
identical
apartment for
$175,000
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A Condo and Coop Closing Compared
Condominium
Cooperative
Type of
transaction
Transfer
documents
Fee simple
ownership
Deed
Personal property;
shares of stock
Taxes at
closing
NYS transfer
tax
NYS transfer fee;
flip tax
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Chapter 16 Condos and Coops
Proprietary lease
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Closing Costs
Real
Estate
Tax
Common
Charges
Tax
Deductions
Mansion
Tax
Mortgage
Recording
Tax
Right of
First
Refusal
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Flipping
Real estate investors
or speculators
believe that they can
turn quick profits by
buying the property
at a certain price and
then immediately
selling the property
at a higher price
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Flipping may be a
problem because it can
drive up prices
The investor attempts
Chapter 16 Condos and Coops
to buy low and sell
high
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