Chapter 17 - Condos and Coops Flashcards
80/20 Rule
Condops - no more than 20% of coop’s annual income can come from non-shareholder sources (retail/commercial tenants) so shareholders can continue to write off taxes/mortgage interest.
Alteration Agreement
Written agreement signed by coops shareholder-tenants before renovations can begin.
Assigning a Contract
Assigning purchase rights to another buyer before unit is closed - used in flipping when investor wants to flip pre-construction.
Board Package
Presented by buyer to coop board - financial qualifications, letter of employment, letters of reference, other requested materials.
Bylaws
Building’s constitution.
Common Areas
Land and improvements that are used by all residents and owned as tenants in common.
Condominium
Property developed for co-ownership, with each owner having a separate interest in an individual unit, as well as undivided interest in common areas.
Condominium Act
NY’s law governing establishment of condos.
Condominium Declaration
Document filed for record when property is developed as a condominium - describes project in detail including drawings.
Condop
A building with multiple condos - first unit is the coop residential units (considered to be one condo) and the second is professional and/or commercial. Coop residents purchase shares, but they are incorporated into one condo unit.
Cooperative
Buildings owned by corporations with residents as shareholders.
Cooperative Policy Statement #1 (CSP-1)
Application to test the market for new condo/coop development.
Covenants, Conditions, and Restrictions (CC&Rs)
Condos - general plan of private restrictions. EX: front doors must be painted certain color, can’t install satellite dishes, etc.
Flip Tax
Fee imposed by coop board on seller for transfer of ownership.
Flipping
Purchasing and quickly reselling property for a property after fixing it up.
Horizontal Property Acts
Make it possible to define ownership rights in condominium.
House Rules
Rules of condo building.
Letter of Intent
Between condo buyer and developer - agree to do business together. Usually non-binding, but can sometimes be binding or enforceable and include a sizable downpayment.
Limited Common Areas
Common areas owned by all but used by one - balcony on one unit extending into air owned by all, individual unit’s parking spot in building garage.
Maintenance Fees
Condo - Common Charges, HOA, Real Estate Taxes. Coop - Maintenance.
Offering Plan
Offers detailed information regarding the condo or coop being developed and must be approved before construction. Includes floor plans, expenses, building materials, expenses, etc.
Proprietary Lease
Lease in coops - gives residents exclusive, longer term lease with stock in the cooperative. Personal vs. real property.
Recognition Agreement
Agreement between lender, coop, and shareholder recognizing rights of the lender financing the shareholder - gives lender opportunity to pay past-due maintenance to avoid foreclosure.
Right of First Refusal
Condo - right to have first chance to buy or lease property if owner decides to sell or lease - rarely happens because requires that board has enough money to buy it back.
