Co-Ops/Condominiums

Question 1

80/20 Rule

Answer 1

Rule: in order for individual shareholders to continue to write off yearly taxes and mortgage interest, no more than 20 percent of a co-op’s yearly income can come from non- shareholder sources.

Question 2

A written agreement, signed by co-op shareholder-tenants, before any renovations, modifications, repairs, or alterations can begin.

Answer 2

Alteration Agreement

Question 3

A document filed with the state that forms a corporation; generally details the purpose of the corporation, its principal place of business, the names of its initial directors, and the breakdown of the stock it issues.

Answer 3

Articles of Incorporation

Question 4

A package presented to the co-op (or sometimes condo) board of managers/directors from a potential shareholder or buyer. It often includes financial qualifications, employment verification, letters of reference, and other material requested by the board.

Answer 4

Board Package

Question 5

Rules and regulations that govern the activities of the condominium and cooperative associations. These include the purpose of the building, rules for elections and voting, and frequency of board of directors or shareholders meetings, among other purposes.

Answer 5

Bylaws

Question 6

A zoning provision, unlike traditional subdivision, where a specific residential or unit density is prescribed, but the developer is allowed to concentrate or disperse the location of units to create different configurations of open space.

Answer 6

Cluster Zoning

Question 7

Areas of a condominium complex that are used and owned by all owners, such as grounds, lobbies, hallways, etc. Each co-owner has an undivided interest in these areas. Also called Common Elements.

Answer 7

Common Areas

Question 8

A property developed for co-ownership, with each co-owner having a separate interest in the airspace in an individual unit, combined with an undivided interest in the common areas of the property.

Answer 8

Condominium

Question 9

Article 9-B of the Real Property Law is New York State’s law governing the establishment of condominiums.

Answer 9

Condominium Act

Question 10

The conversion of a rental, residential property into condominiums.

Answer 10

Condominium Conversion

Question 11

The document that must be filed for record when property is developed as, or converted to, a condominium.

Answer 11

Condominium Declaration

Question 12

A building that has been divided into at least two condominiums. The first is the co-op residential units considered one condominium unit. The second unit is the professional and commercial units.

Answer 12

Condop

Question 13

A building owned by a corporation, where the residents are shareholders in the corporation; each shareholder receives a proprietary lease on an individual unit and the right to use the common area.

Answer 13

Cooperative

Question 14

Applicable to cooperatives, condominiums, and homeowners associations. The CPS-1 is used to test the market, or explore the venture. The market testing needs to meet a variety of conditions.

Answer 14

Cooperative Policy Statement #1

Question 15

Any form of ownership in which two or more people share title to a piece of property, holding undivided interests.

Answer 15

Co-ownership

Question 16

Covenants, Conditions, and Restrictions
A declaration of covenants, conditions, and restrictions; usually recorded by a developer to create a general plan of private restrictions for a subdivision. CC&Rs might stipulate that condo owners cannot paint their front doors certain colors.

Answer 16

CC&Rs

Question 17

A type of timeshare ownership that is fee simple, giving the owner the right to use the property until the owner sells it. This type of timeshare ownership is inheritable. Also called interval ownership.

Answer 17

Deeded Timeshare

Question 18

The greatest estate (ownership) one can have in real property because it is freely transferable and inheritable, and of indefinite duration, with no conditions on the title. Often called Fee Simple or Fee Title.

Answer 18

Fee Simple Absolute

Question 19

A fee, imposed by the co-op board, for the transfer of ownership during the sale of the unit.

Answer 19

Flip Tax

Question 20

Purchasing a piece of property, and immediately reselling it for a profit, usually after fixing it up. This is also called assigning a contract and means assigning your purchase rights to a piece of property or condo unit to another buyer before that property or unit is closed.

Answer 20

Flipping

Question 21

A generic name given to state laws that create the legal framework that allows a condominium form of ownership. These laws give ownership rights to a specific horizontal layer of the airspace within a specific condominium unit. And since they define actual ownership rights, horizontal property laws make it possible for lenders to provide mortgages on condominiums, for tax authorities to assess property taxes, etc.

Answer 21

Horizontal Property Acts

Question 22

The rules and requirements established for the condo or co-op tenants. These could include rules for common areas, parking, noise, pets, use of recreation room, etc. The house rules are listed in the co-op’s proprietary lease or the condo’s bylaws.

Answer 22

House Rules

Question 23

A document or letter stating the buyer’s intent to sign a contract to purchase the property or unit.

Answer 23

Letter of Intent

Question 24

Areas of a condominium complex that are owned by all owners, but are only used by one owner, such as a designated parking space.

Answer 24

Limited Common Area

Question 25

Monthly fees paid by each condo owner or co-op shareholder for common area expenses like utilities, management, building maintenance, and upkeep. Co-ops will include the underlying mortgage in the maintenance fees. Also called Common Area Expenses.

Answer 25

Maintenance Fees

Question 26

A document that converts a parcel of land into a condominium regime; also called enabling declaration, declaration of condominium, or declaration agreement.

Answer 26

Master Deed

Question 27

A document provided by the sponsor that offers detailed information regarding the property. Also called an Offering Statement.

Answer 27

Offering Plan

Question 28

A special type of subdivision that may combine nonresidential uses with residential uses, or otherwise depart from ordinary zoning and subdivision regulations; some _______have lot owners co-own recreational facilities or open spaces as tenants in common.

Answer 28

Planned Unit Development (PUD)

Question 29

Exclusive, longer term lease given to a person who lives in a cooperative and owns stock in the cooperative.

Answer 29

Proprietary Lease

Question 30

An agreement between three parties – the lender, the co-op, and the shareholder – that recognizes the rights of lenders who finance the shareholder.

Answer 30

Recognition Agreement

Question 31

A type of timeshare ownership that is a leasehold, giving the owner the right to use the property for one week a year only for a specified number of years. May or may not be inheritable.

Answer 31

Right-to-Use Timeshare

Question 32

A type of co-op loan signifying a buyer is purchasing shares in a corporation, rather than a mortgage for ownership of property.

Answer 32

Share Loan

Question 33

Also known as the developer, a _______is the person, corporation, or other entity who is part of the sale and development of a condo or co-op property.

Answer 33

Sponsor

Question 34

A form of co-ownership in which two or more persons each have an undivided interest in the entire property (unity of possession), but no right of survivorship.

Answer 34

Tenancy in Common

Question 35

An ownership interest that gives the owner a right to possession of the property only for specific, limited periods.

Answer 35

Timeshare

Question 36

A unique deed held by a unit owner of a condominium that documents the ownership of that specific unit.

Answer 36

Unit Deed

Question 37

The organization that manages the operation of a condominium, imposing assessments and arranging for the maintenance of the common areas. The association’s members are the unit owners and they usually elect a board of directors. Also called a Condominium Association.

Answer 37

Unit Owners’ Association

Question 38

An investor in a co-op building who is not using it as a primary residence. He or she is usually exempt from fees such as flip taxes and subletting fees.

Answer 38

A holder of unsold shares

Question 39

This is a seller financing technique. It means the investor or seller creates a private mortgage note and then simultaneously closes with the buyer on the same day.

Answer 39

Simultaneous closing

Question 40

This is required by RESPA, & presents a final, detailed accounting, listing each party’s debits and credits and the amount each will receive or be required to pay at closing.

Answer 40

settlement statement