Chapter 15. Flashcards by Mzia Surmanidze

Alteration Agreement

Describes the terms under which the cooperative gives permission to a shareholder before making any changes or improvements to the unit the shareholder occupies.

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Board Package

A series of documents submitted for the review by a cooperative board.

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By-laws

The owner’s rights and obligations for a condominium.

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Common Elements

Also known as Common Areas; refers to the spaces in a building shared by residents of the building. Common areas include lobbies, corridors, stairs, elevators, etc

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Condominium

A form of fee simple ownership of part of a structure having multiple units. Owners have title to their own units plus a share of the common elements.

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Condop

A residential establishment that includes both a condominium and cooperative ownership structures. Typically the condop refers to the residential portion of a building which is treated as a single condominium unit owned through a cooperative-ownership structure.

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Cooperative

A dwelling unit owned by a corporation in which an owner owns stock commensurate with the value of his or her apartment compared to the value of the building as a whole. The stockholder has a proprietary lease to the apartment.

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Covenants, Conditions and Restrictions (CCRs)

Limitations and rules on a group of homes by a builder, developer, neighborhood association and/or homeowner associations; when living in a building, a buyer gives up certain freedoms to be part of a shared community.

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Declaration

Also known as a Master Deed, is a fundamental document that establishes the existence of and further governs the use and maintenance of a condominium property.

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House Rules

Rules in a cooperative that cover common issues including garbage disposal, maintenance, noise, and conflict resolution.

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Letter of Intent (LOI)

Generally an agreement to agree. It outlines the terms between parties who have not formalized an agreement into a contract. LOIs are generally not binding and unenforceable.

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Maintenance -

Monthly payments by a shareholder to a cooperative corporation

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Offering Statement

A document prepared by the attorneys representing the builders of a newly constructed condominium building. The statement includes information about the number and type of units in the building, the Homeowners Association rights and duties to owners, and a list of any easements or liens affecting the title of the building. In most cases, buyers looking to purchase a new construction condo get the Offering Statement from their agent before they make an offer on a unit.

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Proprietary Lease

A lease given by a corporation to another. It is often used in a co-op context, where the owner is given a certain number of shares in the co-op, along with a proprietary lease for one of the residences in the building.

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Recognition Agreement

The agreement between the cooperative building and the bank lending money for purchase of shares of stock in the cooperative.

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Share Loan

A loan in which shares of stock are used as collateral. Typically found in cooperative purchase

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Sponsor -

The developer or owner organizing and offering for sale a condominium or cooperative development.

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Flip Tax

A fee paid by a seller or buyer on a housing co-op transaction typically in New York City. It is not a tax, and not deductible as a property tax. It is a transfer fee payable upon the sale of an apartment to the co-op.

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Flipping

A term used for buying a home and then turning around and reselling it for a profit.

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A series of documents submitted for the review by a cooperative board is also known as what…?

Board Package

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This document includes a written record of what occurs at a cooperative board meeting…?

Board Minutes

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Which of the following is transferred to the buyer of condominium apartment at closing…?

Deed

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A condominium apartment is classified as what type of property…?

Real property

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Unlike in a cooperative, a condominium owner does NOT have to go through what, when selling their unit…?

Board approval

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A Cooperative Policy State #1 outlines the rules and regulations with regards to what...?

Developers using brokers to test the market

A fundamental document that establishes the existence of and further governs the use and maintenance of a condominium property is known as...?

Declaration

A declaration is also known as what...?

Master Deed

A term used for buying a home and then turning around and reselling it for a profit is known as...?

Flipping

The agreement between the cooperative building and the bank lending money for the purchase of shares of stock in the cooperative is known as...?

Recognition Agreement

The developer or owner organizing and offering for sale a condominium or cooperative development is also referred to as a...? o

Sponsor

What does a cooperative owner receive at the closing...?

Proprietary Lease

Which of the following are referred to as the spaces in a building shared by residents of the building...?

Common Elements

All cooperative shareholders must pay which of the following each month...?

Maintenance fee

Which of the following is an example of a cost that is covered by cooperative owner's monthly maintenance fee...?

Operating costs

Taxes owed by a corporation that owns a cooperative building are paid by which of the following...?

The shareholder's monthly maintenance fees

The annual budget of a cooperative building is paid for by its shareholders. The amount each shareholder contributes is based on which of the following...?

The percentage of ownership of each shareholder

A cooperative apartment is considered what type of property...?

Personal property

Which of the following is considered chattel...?

Cooperative apartment

What is filed to give notice that a loan was given on a cooperative apartment...?

UCC-1

is a UCC-1 filed to give notice of a loan as opposed to a mortgage...?

A loan is given to the owner of a cooperative apartment

Which of the following may be considered a major concern for a bank seeking to lend money on a cooperative apartment...?

The cooperative has a high number of vacancies

Which of the following may be viewed unfavorably by a bank seeking to lend money on a cooperative apartment...?

A large number of unsold sponsor units

Banks will typically NOT lend on cooperatives in which how many shares remain unsold...?

Greater than 50 (Percent %)

When purchasing a cooperative apartment, this document is provided, which contains key information required to be disclosed to the purchaser...?

Offering Plan

The process by which a rental building becomes a condominium building is known as this...?

Conversion

Who is responsible for approving the offering plan of a condominium or cooperative conversion...?

NYS Attorney General

David owns a cooperative apartment in Midtown Manhattan. He would like to know when the board members of his cooperative meet, as he would like to present architectural plans for the renovation of his apartment. Where should David look to find this information...?

By-laws

John would like to build an additional bathroom in his cooperative apartment. Where should John look to verify if a second bathroom is allowed by the cooperative...?

Cooperative House Rules

Phillip owns a cooperative apartment. He is interested in subletting his apartment to earn extra cash flow but is unsure of the cooperative's rules regarding sub-letting. Where should Phillip look to find this information...?

Cooperative House Rules

As a general rule of thumb, a cooperative should have at least how many months of reserve funds set aside...?

3 months

A list of upcoming capital improvements on a cooperative can be found in this document...?

Cooperative's Financial Statement

How may a condominium owner have a 'right of first refusal' clause waived from their contract with the condominium...?

Ask the managing agent to remove the clause

What is the maximum number of years a sponsor can control the board after the completion of a new condominium...?

5 years

Banks will typically NOT lend on cooperatives in which how many shares remain unsold...?

Greater than 50 (Percent %)

This document provides detailed information about the internal operations of a cooperative...?

By-laws

John would like to build an additional bathroom in his cooperative apartment. Where should John look to verify if a second bathroom is allowed by the cooperative...?

Cooperative House Rules

Mary owns a cooperative apartment and is thinking about getting a cat. However, she is not sure if the cooperative would allow for pets. Where should Mary look to find this information...?

Cooperative House Rules

This document outlines the rules and regulations with regards to developers using brokerage services to 'test the market' for a potential development project...?

CPS1

James recently purchased a condominium apartment. What was recorded on public record after the closing, which proves James' ownership of the apartment...?

Deed

A fundamental document that establishes the existence of and further governs the use and maintenance of a condominium property is known as...?

Declaration

A cooperative apartment is considered what type of property...?

Chattel

Abby recently purchased a cooperative apartment using a loan from a local bank. What was filed after closing, which gave notice of Abby's loan...?

UCC-1

Banks will typically NOT lend on cooperatives in which how many shares remain unsold...?

Greater than 50 (Percent %)

Who holds the right to approve or disapprove an applicant seeking to buy a cooperative apartment...?

The Cooperative Board of Directors

These are required if there are any material changes to the Offering Plan of a cooperative...?

Amendments

This document will list the obligations of the shareholder with regards to repairs and maintenance...?

Proprietary Lease

What should one look for when reviewing a cooperative's financial statement...?

The amount of cash in the cooperative's working capital fund

A condominium contains a minimum of how many units...?

How may a condominium owner have a 'right of first refusal' clause waived from their contract with the condominium...?

Ask the managing agent to remove the clause

A condominium's board is referred to as what...?

Board of Managers

This document outlines the rules and regulations with regards to developers using brokerage services to 'test the market' for a potential development project...?

CPS1

A Cooperative Policy State #1 outlines the rules and regulations with regards to what...?

Developers using brokers to test the market

Which of the following is used as collateral for a mortgage on a condominium apartment...?

The condominium apartment itself

This document outlines the terms between parties who have not formalized an agreement into a contract...?

Letter of Intent

The agreement between the cooperative building and the bank lending money for the purchase of shares of stock in the cooperative is known as...?

Recognition Agreement

The developer or owner organizing and offering for sale a condominium or cooperative development is also referred to as a...?

Sponsor

Who owns the real estate in a cooperative building...?

The corporation that owns the cooperative

Mark owns a 950 sq.ft. cooperative apartment. The size of Mark's apartment is roughly 1/50th of the entire cooperative building. If the cooperative has 2,500,000 shares of stock to distribute among its shareholders, what is a reasonable amount of shares Mark would receive...?

50,000 shares

The offering plan is a key document provided during the purchase of a cooperative. What is provided within the offering plan...?

Information required to be disclosed to the purchaser

This Act requires that key disclosures be provided by a cooperative in the purchase of a unit...?

Martin Act

This document will list the obligations of the shareholder with regards to repairs and maintenance...?

Proprietary Lease

Where should one look to verify the amount of monthly maintenance fees due for a particular cooperative apartment...?

The proprietary lease of the apartment

Andrew owns a cooperative apartment and would like to verify if he is allowed to install a washer/dryer in his unit. Where should Andrew look to find this information...?

Cooperative House Rules

David owns a cooperative apartment in Manhattan. He is thinking about getting a dog but is not sure if the cooperative will allow for pets. Where should David look to find this information...?

Cooperative House Rules

Mary owns a cooperative apartment and is thinking about getting a cat. However, she is not sure if the cooperative would allow for pets. Where should Mary look to find this information...?

Cooperative House Rules

When a bank loans money to finance the purchase of a cooperative apartment, what is used as collateral by the bank...?

The stock interest allocated to the apartment

Abby recently purchased a cooperative apartment using a loan from a local bank. What was filed after closing, which gave notice of Abby's loan...?

UCC-1

Who holds the right to approve the sale or purchase of a cooperative apartment....?

Cooperative Board of Directors

This document describes how directors of a cooperative are elected...?

By-laws

Who owns the corporation that, in turn, owns a cooperative building...?

Shareholders

Martha owns a 3-bedroom cooperative apartment, which accounts for a 2.5% ownership stake among the other shareholders. If the annual budget for the cooperative building amounts to $826,000, how much is Martha responsible for...?

Since Martha has a 2.5% ownership stake in the building, you must multiply their ownership stake by the total annual budget. This equals $826,000 x 0.025 = $20,650.

Michael owns a 2-bedroom cooperative apartment, which accounts for a 2.5% ownership stake among the other shareholders. If the annual budget for the cooperative building amounts to $325,000, how much is Michael responsible for on a monthly basis...?

Since Michael has a 2.5% ownership stake in the building, you must multiply their ownership stake by the total annual budget. This equals $325,000 x 0.025 = $8,125. $8,125 / 12 months = $677.08

What will banks examine when trying to determine if a loan should be given on the purchase of a cooperative apartment...?

The financial strength of both the cooperative building and the shareholder

Who has the right of first refusal when a cooperative unit is up for sale...?

The cooperative

How may a condominium owner have a 'right of first refusal' clause waived from their contract with the condominium...?

Ask the managing agent to remove the clause

A condominium's board is referred to as what...?

Board of Managers

This document outlines the rules and regulations with regards to developers using brokerage services to 'test the market' for a potential development project...?

CPS1

Since Mark's unit is 1/50 of the entire building, you must divide the total number of shares by 50. This equals 2,500,000 / 50 = 50,000.

James is in contract to purchase a cooperative apartment. In order to purchase the apartment, he must obtain financing from the bank. What will the bank use as collateral for the loan...?

James' stock interest allocated to the apartment

When purchasing a cooperative apartment, this document is provided, which contains key information required to be disclosed to the purchaser...?

Offering Plan

Who has the right of first refusal when a cooperative unit is up for sale...?

The cooperative

Where should one look to verify the amount of monthly maintenance fees due for a particular cooperative apartment...?

The proprietary lease of the apartment

bby owns a cooperative apartment and would like to verify if she can install a dishwasher in the kitchen. Where should Abby look to find this information...?

Cooperative House Rules