Minnesota winters are legend, and this past winter was a prime example of just how bad things can be. The sub-zero temperatures and wind chills kept most of us inside for weeks on end. The second the mercury rose to 20, we emerged from our lairs, ready for outside seating and full of information from HGTV home renovation and residential real estate search and sale shows.
Not every house hunter wants a single-family, stand-alone home. Some would prefer to live in an apartment, but they want the financial benefits of ownership. Particularly in large East Coast cities, the question of condominium or cooperative comes up. In the Twin Cities, we are more familiar with condos, but co-ops may seem alien -- unless we know someone who has moved to a development for people age 55 and over. A number of "seniors" buildings in the area are co-ops.
So what's the difference? From the condo conversion boom before the market crashed, we know that condos are apartments that the consumer or investor buys. When you buy a condo, you buy the apartment, twin home or townhome the way you would buy a house. You either pay with a mortgage or with cash. The deed changes hands, and you own everything inside the walls of your unit. You pay property taxes on your real estate.
You are responsible, too, for a proportionate share of common area expenses that are rolled together into a monthly association fee. The expenses, repairs and general maintenance of the common areas and common services (outdoor lighting, for example) are managed by the homeowners association. Common areas include the hallways, the yard, laundry rooms, even, at times, garages; common expenses include trash removal, water and sewer, property taxes and so on.
Every owner is a member of the homeowners association (membership is mandatory), and the board of directors or officers are elected by the members. The founding documents -- the declaration and the bylaws -- lay out the duties of the officers and, importantly, the distribution of shares. The shares go with the unit, not the owner, and are usually calculated based on square footage and location in the building.
As for co-ops ... we'll explain those in our next post.