Condominium and Cooperative Attorney Proudly Serving Livonia, Northville, and Plymouth
Condominiums and co-operatives (co-ops) are "common interest" properties that offer ownership interests that are different from those associated with traditional home ownership. Both options are gaining in popularity and can be a great fit for many individuals.
Condominiums (or simply "condos") are individually owned, just like houses and mobile homes, but are part of a larger community with shared interests and amenities. Typically, there is a homeowner’s association (HOA) which fees are paid to take care of structural elements like the roof, as well as common or shared areas like landscaping and recreational areas.
Cooperatives are similar to apartments and townhouses but have a few important differences. A key difference is that "owners" do not own their unit, but instead hold shares in the corporation that owns the development. The number of shares purchased is typically based on the size of the unit, and often time paid for with a loan (not a traditional mortgage). Like a condominium, residents (sometimes referred to as shareholders pay a monthly maintenance fee to take care of common or shared areas.
As is often the case with rental properties, cooperative shareholders generally are not allowed to make improvements, additions, or other major changes to the unit since they are not owners of the individual unit. However, co-opt usually have on-site maintenance staff for repairs and maintenance.
Advantages and Disadvantages of Condo and Cooperative Home Ownership:
Condominiums and Cooperatives are the main alternative to traditional single-family home ownership or apartment rentals. These forms of ownership offer certain advantages that are appealing to many. These include…
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Budget Friendly: Condos and cooperatives can ease the burden of home ownership and the unexpected expenses that come with home ownership
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Stability: The turnover rate in a condominium unit or cooperative is typically much less than at an apartment complex. This can help to make sure the community is more stable with neighbors taking more pride in ownership
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Maintenance: Having an HOA responsible for the home and lawn maintenance helps ease the burden and time commitment
Common disadvantages include…
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Continued Costs: Unlike a home which will be eventually paid off or an apartment, condos and cooperatives have ongoing costs for your HOA fees
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Restrictions: Changes to the exterior and sometimes the interior can be prohibited with many condominium and cooperative agreements
Additional Considerations:
Contractual Documents:
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Condominiums typically use either a preliminary reservation agreement or a more standard purchase agreement. Condominium purchase agreements contain special statutory language specific to condominiums, but also contain many of the standard provisions found in the purchase of a single-family home. It is also common for an additional addendum to be included which allows for the review of condominium documents.
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Cooperatives use what is most commonly referred to a subscription agreement which facilities the buying and selling of shares in the cooperative’s corporation. This may also be referred to as a usage agreement.
·Buyer’s Due Diligence:
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Condominiums buyers should be provided by a complete package of documents relating to the condominium. If a seller cannot provide the buyer should approach the condo association. This packet will include the mater deed, bylaws, association documentation among other important documents.
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Cooperatives buyers are not protected by a statute like condo buyers are. However, the subscription agreement at a minimum should allow for an inspection period in which the buyer can review the controlling documentation of the cooperative.
Restrictions:
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Potential condo buyers should understand the restrictions are placed on their property prior to buying. This can be found by reviewing the master deed along with the condominium’s bylaws. The bylaws will provide information on restrictions of ownership and occupancy, as well as, information on the procedures of the HOA.
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Cooperative buyers can typically find the restrictive covenants in the lease. They may also be additional restrictive covenants which may the transfer of shares onerous.
Assessments and Reserves
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Before taking ownership of a coop or condo, buyers should understand the corporation’s budget in good detail. If there are major capital expenses expected in the future, this could lead to higher HOA and carrying costs. These are sometimes referred to as special assessments.
When Should you Involve a Real-Estate Attorney?
If you have decided to purchase a condominium or become part of a cooperative there are certain transactions that should be reviewed by attorney. While both forms of ownership are great options for many buyers, it is important to understand each document prior to signing. Matt Devitt Law, PLC is dedicated to educating buyers and helping to ensure that they make informed decision.
Proudly Serving Livonia, Northville, and Plymouth Areas
39111 Six Mile Rd
Livonia, Wayne County 48152
USA
734-335-0713