Chapter 16 Condominiums And Cooperatives Flashcards
What is a cooperative?
When people join to own or control the housing and related facilities in which they live. The cooperative is a non for profit corporation.
Is a cooperative a fee simple ownership?
No
In cooperative ownership the lessees pay a monthly fee which is what?
A maintenance fee and rent
What is the board of directors?
The board overseas the maintenance,finances,and policy decisions of the corporation.
What are the two basic legal obligations that the board of directors have?
Board must follow the co-ops internal rules that are stated in the bylaws, the proprietary lease,the certificate of incorporation and the house rules.
They must exercise good business judgment in making decisions.
What does it mean to understand a financial statement?
Looking into background.
Explain underlying mortgage?
When the owner determine what type of mortgage exist.
Explain a reverse fund ?
Variable expenses (gas leak or accidents)
Do both condos and coops have reserve funds?
Yes
What is a flip tax?
A charge levied when units change hands. But not all cooperatives charge a flip tax.
What are the documents needed for the sale or purchase of cooperatives?
Articles of incorporation,bylaws,proprietary lease, or occupancy agreement , subscription agreement and house rules.
What is a proprietary lease and when is it presented?
Generally a long term lease or estate for years and the seller delivers at the closing.
Who files an offering plan?
The developer who constructs a cooperative or converts a building into a cooperative corporation.
What does a offering plan include?
A declaration and disclosure statement with the New York Attorneys general office which gives approval.
Before approval the first part of the declaration includes what?
The scope of the project a description of the corporate setup.
What is the first part of the review called?
Preliminary prospectus or red herring.(before approval)
Once the Attorney general accepts the Prospectus for filling it is known as what?
Black book or offering plan.
What are house rules?
Kinda like deed restrictions and covers issues such as garbage disposal maintenance noise and conflict resolution.
What are alteration agreements?
Describes the term under which the cooperative gives permission to a shareholder before making any changes or improvements to the apartment.
What is a board package ?
Financial documents which includes tax returns, employment verification, bank statements,loan commitments, social security, and identifies who will be living in the apartment.
What is the type of loan in which shares of stock serve as collateral?
A share loan.
What is a Recognition agreement ?
It describes the relationship between the cooperative and other entities. These entities include government agencies and financial institutions.
Who signs a Recognition agreement? And what is the agreements understanding?
A lender signs it with the cooperative corporation.
Is understanding between a cooperative and the lender that provides share loans to the cooperative shareholders.
What else does the Recognition agreement do?
Outlines the responsibility’s between the cooperative corporation and the lender and describes the actions by each party if a shareholder/member defaults on the loan.
What is a Condop?
A building that includes condominium and cooperative ownership in the same structure.
What is the IRS 80 20 rule (the IRS Regulation?
This means for a shareholder in a cooperative to qualify for the same tax benefits available to other residential property owners at lease 80% of the cooperative gross revenues must be from its shareholders.
What is a Condominium?
A structure of two or more units. The interior space is individually owned.
What is Common Elements?
Remaining property which are owned in common by the owners of the individual units.
What is a sponsor ?
The owner or developer of the condominium.
What is hidden cost?
This occurs when a purchaser believes he or she is reviving one item but receives something else.
What is a Letter of intent?
An agreement to purchase a condominium. It’s the same as a Cooperative Subscription Agreement. A written offer to reserve a specific unit that may be under construction.
What is the CPS1 and how long does it last?
It is the Cooperative Policy Statement and the period last 120 days and the developer can request a extension of 60 days.
What is flipping?
Buying a property at one price then selling for a higher price.
What do Condominium documents include?
Covenants , Conditions , and restrictions.
What is a Mansion tax?
A 1% tax from home buyers who purchase a 1,2,3 family home or an individual condominium or cooperative unit for 1 million or more.
