Saturday, September 5, 2009

What's a co-op apartment?

Co-op vs. Condo

Unless you are from the east coast, chances are you may not know what a co-op (short for “cooperative”) apartment is, and/or how it differs from a condominium.
Here is a short description of some of the major differences.

Residents own their actual unit. They also hold an undivided interest in the common areas of the building such as a courtyard or clubhouse.

Residents hold private title to their unit, including the right to control and transfer the property at will.

A mortgage for a condo finances the purchase of the actual property, using that property as collateral.

Residents elect a board of directors to manage the building, but the association does not retain any rights to dictate to whom residents may sell their units. Neither does the association have control over owner behavior.

The purchase of a condominium is considered to be Real property, so the State of Washington does charge the seller an excise tax.

Members own shares in a corporation, which holds title to the land and the building. Each shareholder has the exclusive right to occupy a specific apartment until/unless the member sells their shares.

Members receive a stock certificate and a proprietary lease showing ownership and occupancy.

A mortgage for the purchase of a co-op is actually a loan to purchase shares in the corporation.

Members elect a board of directors to manage the upkeep of the building and ensure that residents abide by the occupancy agreement. The board retains the right to approve potential members/buyers and can evict owners who violate rules of residency.

Shares in a co-op are not considered to be Real property, so the State of Washington does not charge excise tax on a sale.

Want to know more? Give me a call at 206-708-9800

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