Here’s why it’s so fair to buy a co-op


Q: We’re wondering if you could give us some insight into buying co-ops in the Washington, DC area. We’d like to know how we can get more information about the co-op – its bylaws, financial health, co-op board minutes, etc. – without submitting a contract.

Our daughter is ready to leave on her own. She saw a co-op in a great development that seemed to check every one of her boxes: great value, neighborhood she loved, good size, parking spaces, green spaces and close to work. We were ready to encourage her to put in a deal that day, but we found out it had been on the market for 255 days. Additionally, other apartments for sale in the complex, some beautifully renovated, have been on the market at least that long and longer.

The agent is showing us the apartments because it’s a co-op, and he says people in this area are used to condominiums and prefer that. They have a relatively high HOA, but not unreasonable. We understand that one downside of a condominium is that you don’t have the opportunity to build equity like you would when you own a condo or house, but it makes the place more affordable in the short term. However, we can’t believe people aren’t flocking to this development, which has so much to offer, and we want to know why before we offer a contract.

Additional considerations: Homeowner recommends whole house water shutoff valves.

We met two young people who live there (before we started all these questions) and they both said they really liked the place. My wise sister lived in a co-op in New York for many years and served on the board, so we called her for advice. She said that co-ops (and condos, too) often face problems that may not be obvious to the corporation. She thought we should try to get a copy of the bylaws and minutes from the board meetings, see if the board members are on time limits, and find out if there are any special assessments or mortgages coming up.

The agent was helpful and found that there was a special review; My daughter will have to pay about $7,000 depending on what is left. But he could not give us anything else. He gave us the name of the management company and asked a few people he knew, but they all said, “No problem; Things are good.”

We know we can get a lot of information if we contract, but we don’t have a lot of time to review it. Do you have any idea why these places have been sitting on the market for so long? And any advice on how to get more information?

A: The first place Sam and I bought when we got married was a co-op on Chicago’s Lake Shore Drive. An old building built in the late 1920s (known as “pre-war” in New York). It had generous room sizes, wood burning fires, thick walls and ceilings (so very quiet), great views, tall ceilings and only two rooms on each level, making it private.

We loved it and, as your daughter could see, it was worth it to us.

The problem with buying a condo outside of New York is that most buyers and real estate agents don’t understand how condos work and why the monthly assessment is so much higher than a condo of the same size with the same amenities.

The difference is related to how the property is owned. With a condo, the owner has a proportional share of all the space in the walls, ceiling and floor, as well as the common elements. Condominiums are individually owned and the condo receives its own real estate tax bill.

In cooperative construction, the entire building is owned by the corporation. In many condominiums owned by corporations, the common owners own shares in the corporation’s stock. You can say that the ownership of that share also gives them the right to rent a certain apartment in the communal building. The cooperative corporation pays taxes on the entire building (and any property owned by the corporation), and the apartment owner pays their share of the property tax in the monthly rent of the apartment.

In a co-op building, the monthly lease payment on a unit covers the building’s maintenance fees and insurance, but also covers real estate taxes and mortgage interest paid by the co-op on the building.

There are other differences, including that corporations typically have the right not to allow one person to buy another person’s stock in the corporation. You can reject a prospective buyer for any reason, but you can’t violate the federal Fair Housing Act. Mostly, you’ll hear about this in New York, where the Co-op building has turned down Madonna, Antonio Banderas and his then-wife Melanie Griffith, among others. In a story a few years ago, the New York Times quoted agents as saying that the estimated rate of decline was between 3 and 5 percent.

There may be laws restricting other types of activity, such as renting out the co-op unit. In other words, if your daughter decides she wants to move and rent, she may not be able to, or her prospective tenant will need board approval.

It’s not that complicated, but maybe because condos aren’t as common as condos, some agents seem to have a hard time explaining how a co-op works and why monthly assessments are so high.

Additional issues: Buyers fail the good faith test, and sellers consider next steps

We think you’d be smart to try to get more information ahead of time. Most of this information is distributed to owners throughout the year, and you may need to ask the seller to go through their files for this information or ask to see it before agreeing to make an offer on it. The location.

Your story reminded me of a recent news story about a New York condominium that used to sell for millions of dollars, but now sells for around $100,000. The land on which that condominium sits is owned by a third party that has skyrocketed the ground rent, and now the owners are at a crossroads in deciding whether to buy or sell the landlord for millions of dollars. Exit and continue. Condominiums can, and often do, have pitfalls that you won’t see in a condo development. This is probably what your sister said when she mentioned the legal issues.

Still, if the market today is very good and affordable for her, she can get financing, and if she has enough information to make an informed decision, she can decide to make an offer that she’s comfortable with, even if it’s a low offer.

Remember, when it’s time to sell, it’s the price you can offer. good luck.

Ellis Glink is the author of “100 questions every first time home buyer should ask” (Fourth Edition). She is also the CEO of Best Money Moves, an app that employers offer to employees to measure and reduce financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Find them through their website,

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