The housing co-op law governing residential buildings is based on the same concept as any other co-operative. A registered corporation with a board of directors owns the building, and each resident is a shareholder in the co-op who leases a unit. The shares are allotted based on the size of the unit that is leased. There are advantages to this arrangement and some restrictions, too. The maintenance is taken care of by the co-op, but residents are not allowed to modify or make their own construction decisions within their leased unit.
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Listed below are the major issues to keep note of when purchasing shares in a co-op:
Maintenance fees are often a point of contention in co-operatives. Since the co-op is responsible for it, they charge monthly maintenance fees and you have no option but to get hold of the supervisor to fix things. If the maintenance is not good enough, then you may be stuck with a huge bill every month in return for mediocre service.
Apart from the maintenance fees, study the bylaws carefully to see what you can and cannot do as a resident and shareholder. The mortgage agreement is also a critical part, because you do not actually become the owner of the property. You are simply getting a loan to buy shares, so it has to be done a bit differently from a traditional mortgage.
Do you have additional questions regarding co-op laws in your area? Our real estate attorneys are here to assist you throughout the process and answer any questions you may have. Contact a real estate lawyer near you today.
Did you know?
Co-op law as specified in the corporation's bylaws is superseded by state law if there is a conflict.
Since housing co-ops are also a registered corporation, they are governed by state laws regarding incorporated organizations. In case of conflict between the co-op's bylaws and state laws, the state law will prevail.