Question 1

Cooperatives and Condominiums



BECAUSE, they actually synthesize a whole bunch of issues, including landlord tenant law, air space and legal descriptions, CCR’s, easements and co-ownership

Accepted Answer

synthesize a whole bunch of issues, including landlord tenant law, air space and legal descriptions, CCR’s, easements and co-ownership

Question 2

The Golden Ticket (at least taxwise)
Tax Benefits of Home Ownership in the US

Accepted Answer

1.Mortgage interest & property taxes are deductible2.Avoidance of tax on sale of primary residence-2 year use as primary residence within last 5 prior to sale gets $250,000 capital gain exclusion for 1 person3.Small,temporary 10% tax  credit-newer owners

Question 3

The Problem
You live in New York (or some other big city), where most residents lease an apartment

Accepted Answer

1.Those residents are tenants-their rent covers the landlord’s mortgage insurance and property taxes,landlord gets deductions, & tenants get 0 writeoffs.
2.rent payments do not build any equity and they have nothing significant to sell when they move

Question 4

2 solutions for these people

Accepted Answer

1.cooperative 2. condominium

Question 5

Solution 1–A Cooperative-6 points-Here's 1-4

Accepted Answer

1.Corporation is formed to build or buy an apartment building, with intent to make it a co-op 2.The corporation issues shares to tenants in exchange for $s 3. gets “Blanket
Mortgage” 4.each shareholder gets to lease an apartment in the co-op

Question 6

Co-op Points 5-6

Accepted Answer

5.Sec 216 of Internal Revenue Code allows co-op tenants to deduct a portion of the rent they pay 6.the Shares and Proprietary Lease of a residential cooperative are “deemed” the same as fee ownership of home

Question 7

blanket mortgage

Accepted Answer

using the tenant’s $’s as equity, the corporation finances the rest of the construction/purchase price with a mortgage

Question 8

deductible -the portion of the rent they pay that is deductible

Accepted Answer

amount that is devoted to the corporation’s mortgage interest and property taxes

Question 9

proprietary lease - Each shareholder is allowed to lease an apartment in the co-op

Accepted Answer

1.homeowner’s bundle of rights consists of shares in a corporation and rights as tenant 2.The corporation pays interest on its mortgage and pays the property taxes on the building

Question 10

co-ops are not real estate

Accepted Answer

1.no conveyances 2. transfer and financing of co-op apartment - for portions of the purchase price that represent payment for the seller's equity-are governed by the UCC, not real estate law

Question 11

co-op purchasers are buying in to a "going business"

Accepted Answer

be sure you calculate the seller's share of corporate liabilities and deduct it from the apartment's value before agreeing on a price

Question 12

What happens to a Blanket Mortgage if a significant number of the co-op’s shareholder/tenants fail to pay their rent?

Accepted Answer

do you know?

Question 13

condominiums - same problem as co-ops, but a true "real estate" solution

Accepted Answer

1.condominiums create real estate that can be owned in fee simple, transferred by deed and mortgaged, just like a single family detached residence
2.unlike co-ops, condominiums can be used for non-residential purposes like parking places, in big cities

Question 14

How are Condominiums created?  Pictures and Words recorded with the Register of Deeds

Accepted Answer

condominium plat - pictures are site plans for the condominium project and individual floor plans of occupiable buildings(or dimensional drawings for parking places, etc.)

Question 15

words recorded with the register of deeds

Accepted Answer

Words are contained in a document called the Condominium Declaration

Question 16

Condominium Declaration is a master deed restriction/CCR/easement document
It defines:

Accepted Answer

1.UNITS that are owned individually by the buyers 2.COMMON ELEMENTS that the Unit owners hold as Tenants in Common 3.LIMITED COMMON ELEMENTS that are common elements dedicated to individual use by Unit owners

Question 17

Condominium Declaration also defines

Accepted Answer

4.an assoc of Unit owners that acts like a little govt to manage Common Elements, make rules governing use of Units & Common Elements, insure property & collect condominium fees 5.maintenance obligations of  Unit owners & Assoc

Question 18

Unlike a Cooperative apartment, a condominium Unit and related interest in the Common Elements are truly real estate

Accepted Answer

1.can be deeded, mortgaged etc.2.Associations do not often borrow large amounts, so the issue of Blanket Mortgage is not as great a concern as for co-ops

Question 19

condos-What happens if a significant number of condo Unit owners are foreclosed, and liens for Association fees are left unpaid?

Accepted Answer

do you know what happens?

Real Estate - 350

Co-ops and Condominiums

Question	Answer
Cooperatives and Condominiums BECAUSE, they actually synthesize a whole bunch of issues, including landlord tenant law, air space and legal descriptions, CCR’s, easements and co-ownership	synthesize a whole bunch of issues, including landlord tenant law, air space and legal descriptions, CCR’s, easements and co-ownership
The Golden Ticket (at least taxwise) Tax Benefits of Home Ownership in the US	1.Mortgage interest & property taxes are deductible2.Avoidance of tax on sale of primary residence-2 year use as primary residence within last 5 prior to sale gets $250,000 capital gain exclusion for 1 person3.Small,temporary 10% tax credit-newer owners
The Problem You live in New York (or some other big city), where most residents lease an apartment	1.Those residents are tenants-their rent covers the landlord’s mortgage insurance and property taxes,landlord gets deductions, & tenants get 0 writeoffs. 2.rent payments do not build any equity and they have nothing significant to sell when they move
2 solutions for these people	1.cooperative 2. condominium
Solution 1–A Cooperative-6 points-Here's 1-4	1.Corporation is formed to build or buy an apartment building, with intent to make it a co-op 2.The corporation issues shares to tenants in exchange for $s 3. gets “Blanket Mortgage” 4.each shareholder gets to lease an apartment in the co-op
Co-op Points 5-6	5.Sec 216 of Internal Revenue Code allows co-op tenants to deduct a portion of the rent they pay 6.the Shares and Proprietary Lease of a residential cooperative are “deemed” the same as fee ownership of home
blanket mortgage	using the tenant’s $’s as equity, the corporation finances the rest of the construction/purchase price with a mortgage
deductible -the portion of the rent they pay that is deductible	amount that is devoted to the corporation’s mortgage interest and property taxes
proprietary lease - Each shareholder is allowed to lease an apartment in the co-op	1.homeowner’s bundle of rights consists of shares in a corporation and rights as tenant 2.The corporation pays interest on its mortgage and pays the property taxes on the building
co-ops are not real estate	1.no conveyances 2. transfer and financing of co-op apartment - for portions of the purchase price that represent payment for the seller's equity-are governed by the UCC, not real estate law
co-op purchasers are buying in to a "going business"	be sure you calculate the seller's share of corporate liabilities and deduct it from the apartment's value before agreeing on a price
What happens to a Blanket Mortgage if a significant number of the co-op’s shareholder/tenants fail to pay their rent?	do you know?
condominiums - same problem as co-ops, but a true "real estate" solution	1.condominiums create real estate that can be owned in fee simple, transferred by deed and mortgaged, just like a single family detached residence 2.unlike co-ops, condominiums can be used for non-residential purposes like parking places, in big cities
How are Condominiums created? Pictures and Words recorded with the Register of Deeds	condominium plat - pictures are site plans for the condominium project and individual floor plans of occupiable buildings(or dimensional drawings for parking places, etc.)
words recorded with the register of deeds	Words are contained in a document called the Condominium Declaration
Condominium Declaration is a master deed restriction/CCR/easement document It defines:	1.UNITS that are owned individually by the buyers 2.COMMON ELEMENTS that the Unit owners hold as Tenants in Common 3.LIMITED COMMON ELEMENTS that are common elements dedicated to individual use by Unit owners
Condominium Declaration also defines	4.an assoc of Unit owners that acts like a little govt to manage Common Elements, make rules governing use of Units & Common Elements, insure property & collect condominium fees 5.maintenance obligations of Unit owners & Assoc
Unlike a Cooperative apartment, a condominium Unit and related interest in the Common Elements are truly real estate	1.can be deeded, mortgaged etc.2.Associations do not often borrow large amounts, so the issue of Blanket Mortgage is not as great a concern as for co-ops
condos-What happens if a significant number of condo Unit owners are foreclosed, and liens for Association fees are left unpaid?	do you know what happens?

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