Condominium

Cooperative Apartment

• Deed ownership to unit and undivided interest in common elements.

• Ownership of stock or corporation owning building with right to a lease to a designated unit.

• Unit owner may finance and refinance his unit with mortgage.

• Cooperator may finance and refinance his stock ownership and lease with loan secured by pledge of stock and lease as collateral.  Called personal loan (may think and call it a mortgage).

• Condominium cannot mortgage common elements.

• Cooperator may finance and refinance his stock ownership and lease with loan secured by pledge of stock and lease as collateral.  Called personal loan (may think and call it a mortgage).

• Condominium Board of Managers has right to first refusal of match offer to purchase or lease unit.  Most never exercise it.

• Cooperative apartment corporation can mortgage building.  Called underlying mortgage (in addition to buyer tenant’s personal loan).

• Failure of unit owner to pay common charges increases costs to other unit owners for operating expenses – no risk of foreclosure to other unit owners.

• Failure of cooperator to pay maintenance (rent) increases costs to other unit owners for operating expenses and debt service on underlying mortgage – risk of foreclosure on entire building.

• Condominium may foreclose on individual unit for failure to pay common charges.

• Apartment corporation foreclose on cooperator’s apartment for failure to pay maintenance.

• Units separately assessed for real estate taxes – each unit owner pays his own real estate taxes and mortgage.

• Entire building assessed as a whole – cooperator’s maintenance used to pay portion of real estate taxes and underlying mortgage.

• Each unit owner deducts real estate taxes and mortgage interest paid directly by him.

• Each cooperator deducts his proportionate share of real estate taxes and interest on underlying mortgage paid as part of his maintenance – also, deducts interest on individual cooperative apartment loan paid directly by him.

• On new condos, buyers may be locked into a specific bank or two.  On re-sales, most will make a loan. Rates are comparable to a home.

• Interest rates and sometimes points are higher because it’s a personal loan.