Defining a Co-op
A Co-op is a housing complex, which is owned by a corporation made up of all the tenants. Each tenant becomes a shareholder in the corporation that owns the property. The number of shares the tenants are issued depends on the size of their unit. The larger unit owners always have more decision making power in how the building is run. The owners also pay fees to cover their own portion of the building’s property taxes, mortgage, and costs of repairs and improvements for the common areas. Co-op owners depend on each other financially, so they can encounter a lot of scrutiny of both the financial history and personal life of each tenant.
The Definition of Condominiums
Owning a condo is similar in many ways to owning a house. The owner has a deed and mortgage and they have to pay property taxes. However, what the actual ownership if the condo is really just its “airspace.” They don’t personally own the walls, floors, and ceilings, as that is owned in common among all residents. The condo owner must join the homeowners association (HOA) and pay monthly dues to cover management, insurance, maintenance, landscaping, etc. Maintenance is shared with their neighboring condo owners; the property value depends on the condition and desirability of the entire development. Condo owners usually can remodel their units only within the guidelines provided by covenants, conditions, and restrictions, which can specify quite a bit, from how maintenance is handled to what color curtains can be hung. When purchasing a condo, it’s crucial to read the covenants before making the purchase.
Planned Unit Development (PUD)
PUD owners individually own their residential structure plus a small parcel of the land surrounding it. As with condo ownership, PUDs do require membership in the HOA, but the land around each unit is maintained by the unit’s owner. If you’re interested in having a yard, this is definitely the way to go.
What is a Townhome?
The word Townhome is really just an architectural term that is commonly used to describe an attached row house and not actually a form of ownership.
Advantages of Common Interest Ownership
When considering all the options, there are the advantages of buying a condo, PUD, or co-op. First, prices are usually much lower than single-family homes, plus landscaping and maintenance are minimal or nonexistent. Some people tend to feel safer in a “cluster” environment, and they like having a common maintenance service.
The Disadvantages of Common Interest Ownership
One big disadvantage to many people is that the homeowners’ dues are not tax-deductible. These dues are an ongoing expense that will lower the amount of the mortgage one may qualify for. The documents can be long and complex; many people hire a real estate attorney to review them.
If you area interested in purchasing a home of ANY type, please call me anytime – I’m happy to help! 708.243.9161.
