Chapter 16 Condominiums And Cooperatives

Question 1

What is a cooperative?

Answer 1

When people join to own or control the housing and related facilities in which they live. The cooperative is a non for profit corporation.

Question 2

Is a cooperative a fee simple ownership?

Answer 2

No

Question 3

In cooperative ownership the lessees pay a monthly fee which is what?

Answer 3

A maintenance fee and rent

Question 4

What is the board of directors?

Answer 4

The board overseas the maintenance,finances,and policy decisions of the corporation.

Question 5

What are the two basic legal obligations that the board of directors have?

Answer 5

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.

Question 6

What does it mean to understand a financial statement?

Answer 6

Looking into background.

Question 7

Explain underlying mortgage?

Answer 7

When the owner determine what type of mortgage exist.

Question 8

Explain a reverse fund ?

Answer 8

Variable expenses (gas leak or accidents)

Question 9

Do both condos and coops have reserve funds?

Answer 9

Yes

Question 10

What is a flip tax?

Answer 10

A charge levied when units change hands. But not all cooperatives charge a flip tax.

Question 11

What are the documents needed for the sale or purchase of cooperatives?

Answer 11

Articles of incorporation,bylaws,proprietary lease, or occupancy agreement , subscription agreement and house rules.

Question 12

What is a proprietary lease and when is it presented?

Answer 12

Generally a long term lease or estate for years and the seller delivers at the closing.

Question 13

Who files an offering plan?

Answer 13

The developer who constructs a cooperative or converts a building into a cooperative corporation.

Question 14

What does a offering plan include?

Answer 14

A declaration and disclosure statement with the New York Attorneys general office which gives approval.

Question 15

Before approval the first part of the declaration includes what?

Answer 15

The scope of the project a description of the corporate setup.

Question 16

What is the first part of the review called?

Answer 16

Preliminary prospectus or red herring.(before approval)

Question 17

Once the Attorney general accepts the Prospectus for filling it is known as what?

Answer 17

Black book or offering plan.

Question 18

What are house rules?

Answer 18

Kinda like deed restrictions and covers issues such as garbage disposal maintenance noise and conflict resolution.

Question 19

What are alteration agreements?

Answer 19

Describes the term under which the cooperative gives permission to a shareholder before making any changes or improvements to the apartment.

Question 20

What is a board package ?

Answer 20

Financial documents which includes tax returns, employment verification, bank statements,loan commitments, social security, and identifies who will be living in the apartment.

Question 21

What is the type of loan in which shares of stock serve as collateral?

Answer 21

A share loan.

Question 22

What is a Recognition agreement ?

Answer 22

It describes the relationship between the cooperative and other entities. These entities include government agencies and financial institutions.

Question 23

Who signs a Recognition agreement? And what is the agreements understanding?

Answer 23

A lender signs it with the cooperative corporation.

Is understanding between a cooperative and the lender that provides share loans to the cooperative shareholders.

Question 24

What else does the Recognition agreement do?

Answer 24

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.

Question 25

What is a Condop?

Answer 25

A building that includes condominium and cooperative ownership in the same structure.

Question 26

What is the IRS 80 20 rule (the IRS Regulation?

Answer 26

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.

Question 27

What is a Condominium?

Answer 27

A structure of two or more units. The interior space is individually owned.

Question 28

What is Common Elements?

Answer 28

Remaining property which are owned in common by the owners of the individual units.

Question 29

What is a sponsor ?

Answer 29

The owner or developer of the condominium.

Question 30

What is hidden cost?

Answer 30

This occurs when a purchaser believes he or she is reviving one item but receives something else.

Question 31

What is a Letter of intent?

Answer 31

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.

Question 32

What is the CPS1 and how long does it last?

Answer 32

It is the Cooperative Policy Statement and the period last 120 days and the developer can request a extension of 60 days.

Question 33

What is flipping?

Answer 33

Buying a property at one price then selling for a higher price.

Question 34

What do Condominium documents include?

Answer 34

Covenants , Conditions , and restrictions.

Question 35

What is a Mansion tax?

Answer 35

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.