Condos and Co-ops
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So a little blue house with a white picket fence just isn't your speed? You'd rather be in a high-rise with a yard you'll never have to mow and a big pool you'll never have to clean? How about a condo or a co-op?
Condos and co-ops are similar in that they are apartment-type living spaces within a large building (or group of buildings). The difference is in the type of ownership that you will have.
With your condo you own all of the space within the four walls of your living area. You also own the right to use the common area of your complex. For this privilege you pay monthly fees to your condo association, which takes care of things like cutting the grass and painting the lines in the parking lot. You are a member of the condo association and you can vote on things like firing the person in charge of painting the lines if he doesn't do a good job.
If this sounds interesting to you, find out what exactly you would be buying. Typically, you will own the interior of your unit, while the common area will be collectively owned by you and all of the other owners. Where it can sometimes get confusing is with such things as parking spaces and yards. In some complexes, you will own your parking space(s), while in others the spaces are collectively owned but you have exclusive use of an assigned space. In townhouses, you might own the backyard but the front yard is a common element, and so on.
Your lawyer or real estate agent should be able to get this information for you. Or, you can ask the condominium management for written specifics about what is privately owned and what is collectively owned.
If you own a co-op, you do not own the space within your four walls. You own shares in the co-operative. Think of it like a company (which it is). You don't own a piece of the manufacturing equipment or the marketing department, but a little piece of the entire enterprise. You also pay monthly dues to the co-op member board, which decides things like who gets to cut the grass. You too, you little communist, can now fire the grass cutter if you get enough of your comrades to vote with you.
All expenses -- including taxes, utility bills, and the mortgage -- are paid jointly by all owners in the co-op. (By comparison, condominium owners pay their own taxes and mortgages. Utility bills might also be paid individually, or they might be included in the maintenance fee).
The advantages of this kind of arrangement are pretty simple to see. You don't have to worry about the yard work or the pool maintenance (just like an apartment), but you now have something of value that you can call your own.
The disadvantages might not be so obvious. Just like an apartment, there will be limits on things like pets and wild decor. If you want DirecTV, you could be out of luck. It might not be OK to have an antenna. Also, selling your co-op might be something of a hassle because your fellow owners have the power to nix it if they don't like who you're selling it to. (They can't discriminate on things like race, gender, or religion, but they can keep out someone who they think will throw loud parties.)
Also, because all expenses (utilities, insurance, taxes, mortgage) are paid jointly by all owners in the co-op, each one shares liability for the payments of the others. This means that if an owner defaults on a payment, the other owners must pay his or her share, then try to collect.
Check up on what your condo association or co-op board is really like. Are your fees really going to be put to good use? Are the big ticket items, like the roof and the parking lot, being taken care of?
Your new home might be a part of a larger community, with restrictions that you'll have to live with. Before you borrow $150,000, make sure that these are things you won't regret in six months.