Co-Ops/Condominiums Flashcards
80/20 Rule
Rule: in order for individual shareholders to continue to write off yearly taxes and mortgage interest, no more than 20 percent of a co-op’s yearly income can come from non- shareholder sources.
A written agreement, signed by co-op shareholder-tenants, before any renovations, modifications, repairs, or alterations can begin.
Alteration Agreement
A document filed with the state that forms a corporation; generally details the purpose of the corporation, its principal place of business, the names of its initial directors, and the breakdown of the stock it issues.
Articles of Incorporation
A package presented to the co-op (or sometimes condo) board of managers/directors from a potential shareholder or buyer. It often includes financial qualifications, employment verification, letters of reference, and other material requested by the board.
Board Package
Rules and regulations that govern the activities of the condominium and cooperative associations. These include the purpose of the building, rules for elections and voting, and frequency of board of directors or shareholders meetings, among other purposes.
Bylaws
A zoning provision, unlike traditional subdivision, where a specific residential or unit density is prescribed, but the developer is allowed to concentrate or disperse the location of units to create different configurations of open space.
Cluster Zoning
Areas of a condominium complex that are used and owned by all owners, such as grounds, lobbies, hallways, etc. Each co-owner has an undivided interest in these areas. Also called Common Elements.
Common Areas
A property developed for co-ownership, with each co-owner having a separate interest in the airspace in an individual unit, combined with an undivided interest in the common areas of the property.
Condominium
Article 9-B of the Real Property Law is New York State’s law governing the establishment of condominiums.
Condominium Act
The conversion of a rental, residential property into condominiums.
Condominium Conversion
The document that must be filed for record when property is developed as, or converted to, a condominium.
Condominium Declaration
A building that has been divided into at least two condominiums. The first is the co-op residential units considered one condominium unit. The second unit is the professional and commercial units.
Condop
A building owned by a corporation, where the residents are shareholders in the corporation; each shareholder receives a proprietary lease on an individual unit and the right to use the common area.
Cooperative
Applicable to cooperatives, condominiums, and homeowners associations. The CPS-1 is used to test the market, or explore the venture. The market testing needs to meet a variety of conditions.
Cooperative Policy Statement #1
Any form of ownership in which two or more people share title to a piece of property, holding undivided interests.
Co-ownership
Covenants, Conditions, and Restrictions
A declaration of covenants, conditions, and restrictions; usually recorded by a developer to create a general plan of private restrictions for a subdivision. CC&Rs might stipulate that condo owners cannot paint their front doors certain colors.
CC&Rs
A type of timeshare ownership that is fee simple, giving the owner the right to use the property until the owner sells it. This type of timeshare ownership is inheritable. Also called interval ownership.
Deeded Timeshare
The greatest estate (ownership) one can have in real property because it is freely transferable and inheritable, and of indefinite duration, with no conditions on the title. Often called Fee Simple or Fee Title.
Fee Simple Absolute
A fee, imposed by the co-op board, for the transfer of ownership during the sale of the unit.
Flip Tax
Purchasing a piece of property, and immediately reselling it for a profit, usually after fixing it up. This is also called assigning a contract and means assigning your purchase rights to a piece of property or condo unit to another buyer before that property or unit is closed.
Flipping
A generic name given to state laws that create the legal framework that allows a condominium form of ownership. These laws give ownership rights to a specific horizontal layer of the airspace within a specific condominium unit. And since they define actual ownership rights, horizontal property laws make it possible for lenders to provide mortgages on condominiums, for tax authorities to assess property taxes, etc.
Horizontal Property Acts
The rules and requirements established for the condo or co-op tenants. These could include rules for common areas, parking, noise, pets, use of recreation room, etc. The house rules are listed in the co-op’s proprietary lease or the condo’s bylaws.
House Rules
A document or letter stating the buyer’s intent to sign a contract to purchase the property or unit.
Letter of Intent
Areas of a condominium complex that are owned by all owners, but are only used by one owner, such as a designated parking space.
Limited Common Area
Monthly fees paid by each condo owner or co-op shareholder for common area expenses like utilities, management, building maintenance, and upkeep. Co-ops will include the underlying mortgage in the maintenance fees. Also called Common Area Expenses.
Maintenance Fees
A document that converts a parcel of land into a condominium regime; also called enabling declaration, declaration of condominium, or declaration agreement.
Master Deed
A document provided by the sponsor that offers detailed information regarding the property. Also called an Offering Statement.
Offering Plan
A special type of subdivision that may combine nonresidential uses with residential uses, or otherwise depart from ordinary zoning and subdivision regulations; some _______have lot owners co-own recreational facilities or open spaces as tenants in common.
Planned Unit Development (PUD)
Exclusive, longer term lease given to a person who lives in a cooperative and owns stock in the cooperative.
Proprietary Lease
An agreement between three parties – the lender, the co-op, and the shareholder – that recognizes the rights of lenders who finance the shareholder.
Recognition Agreement
A type of timeshare ownership that is a leasehold, giving the owner the right to use the property for one week a year only for a specified number of years. May or may not be inheritable.
Right-to-Use Timeshare
A type of co-op loan signifying a buyer is purchasing shares in a corporation, rather than a mortgage for ownership of property.
Share Loan
Also known as the developer, a _______is the person, corporation, or other entity who is part of the sale and development of a condo or co-op property.
Sponsor
A form of co-ownership in which two or more persons each have an undivided interest in the entire property (unity of possession), but no right of survivorship.
Tenancy in Common
An ownership interest that gives the owner a right to possession of the property only for specific, limited periods.
Timeshare
A unique deed held by a unit owner of a condominium that documents the ownership of that specific unit.
Unit Deed
The organization that manages the operation of a condominium, imposing assessments and arranging for the maintenance of the common areas. The association’s members are the unit owners and they usually elect a board of directors. Also called a Condominium Association.
Unit Owners’ Association
An investor in a co-op building who is not using it as a primary residence. He or she is usually exempt from fees such as flip taxes and subletting fees.
A holder of unsold shares
This is a seller financing technique. It means the investor or seller creates a private mortgage note and then simultaneously closes with the buyer on the same day.
Simultaneous closing
This is required by RESPA, & presents a final, detailed accounting, listing each party’s debits and credits and the amount each will receive or be required to pay at closing.
settlement statement
