A man builds a fine house; and now he has a master, and a task for life; he is to furnish, watch, show it, and keep it in repair, the rest of his days.”
Ralph Waldo Emerson (1803 – 1882)
A condominium is another type of apartment; however, owning a condominium is very different from “owning” a co-op. In a condominium, owners actually own their space as real estate, as opposed to owning shares in the co-op building. They have a deed, the same way you have a deed on a house. When a person owns a condominium apartment, he/she owns whatever is inside the walls/unit and also a proportionate share of the common elements of the building. For example, if there are 4 apartments in the building, the owner would have a deed for their apartment and a 25% interest in the common elements in the building as well.
Just like with the co-op, the building has an offering plan. It has a budget and, depending on its size, they may have a management company and it can borrow money, if needed. Monthly maintenance payments in condominiums are usually called “common charges” and they relate to the unit owner’s proportionate share of the costs needed to run the building.
Because the person owns the apartment and has a deed, it is considered “real property” in the same way a house is considered real property. The owner of a condominium apartment would be responsible for the real estate taxes, whereas in a co-op, a unit owner is a shareholder in the corporation, so a portion of the real estate taxes of the building is incorporated into that unit owner’s monthly maintenance payment. In a condominium, the same way as with a house, you pay the real estate taxes that are allocated to the property that you own, which is your own apartment.
In a divorce situation, where a party or the parties decide that ownership may need to be transferred, it is much simpler to transfer ownership of a condominium than that of a co-op. Usually, the Condo Board does not have to be involved. It merely receives notice that the condominium ownership has changed.
Many condominium boards still maintain a Board application process for purchasers, however the only way a Condominium Board can reject the transaction, is by opting to purchase the apartment themselves. This is called, “the right of first refusal” and Condominium Boards usually simply issue a piece of paper, called “Waiver of the Right of First Refusal” to the parties, prior to the closing of a sale of one of their units.
Whether parties decide to sell or buy a Condominium in their normal daily life or transfer ownership during a change in a family structure, such as a divorce, death, estate planning, etc. it is critical to understand how condominium ownership works and to insert clear and effective language in the agreements that would govern the process.
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