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So
a little blue house with a white picket fence just isn't your
speed? You'd rather be in a high-rise with a yard you'll never
have to mow and a big pool you'll never have to clean? How
about a condo or a co-op?
Condos and co-ops are similar in that they are apartment-type
living spaces within a large building (or group of buildings).
The difference is in the type of ownership that you will have.
With your condo you own all of the space within the four walls
of your living area. You also own the right to use the common
area of your complex. For this privilege you pay monthly fees
to your condo association, which takes care of things like
cutting the grass and painting the lines in the parking lot.
You are a member of the condo association and you can vote
on things like firing the person in charge of painting the
lines if he doesn't do a good job.
If this sounds interesting to you, find out what exactly you
would be buying. Typically, you will own the interior of your
unit, while the common area will be collectively owned by
you and all of the other owners. Where it can sometimes get
confusing is with such things as parking spaces and yards.
In some complexes, you will own your parking space(s), while
in others the spaces are collectively owned but you have exclusive
use of an assigned space. In townhouses, you might own the
backyard but the front yard is a common element, and so on.
Your lawyer or real estate agent should be able to get this
information for you. Or, you can ask the condominium management
for written specifics about what is privately owned and what
is collectively owned.
If you own a co-op, you do not own the space within your four
walls. You own shares in the co-operative. Think of it like
a company (which it is). You don't own a piece of the manufacturing
equipment or the marketing department, but a little piece
of the entire enterprise. You also pay monthly dues to the
co-op member board, which decides things like who gets to
cut the grass. You too, you little communist, can now fire
the grass cutter if you get enough of your comrades to vote
with you.
All expenses -- including taxes, utility bills, and the mortgage
-- are paid jointly by all owners in the co-op. (By comparison,
condominium owners pay their own taxes and mortgages. Utility
bills might also be paid individually, or they might be included
in the maintenance fee).
The advantages of this kind of arrangement are pretty simple
to see. You don't have to worry about the yard work or the
pool maintenance (just like an apartment), but you now have
something of value that you can call your own.
The disadvantages might not be so obvious. Just like an apartment,
there will be limits on things like pets and wild decor. If
you want DirecTV, you could be out of luck. It might not be
OK to have an antenna. Also, selling your co-op might be something
of a hassle because your fellow owners have the power to nix
it if they don't like who you're selling it to. (They can't
discriminate on things like race, gender, or religion, but
they can keep out someone who they think will throw loud parties.)
Also, because all expenses (utilities, insurance, taxes, mortgage)
are paid jointly by all owners in the co-op, each one shares
liability for the payments of the others. This means that
if an owner defaults on a payment, the other owners must pay
his or her share, then try to collect.
Check up on what your condo association or co-op board is
really like. Are your fees really going to be put to good
use? Are the big ticket items, like the roof and the parking
lot, being taken care of?
Your new home might be a part of a larger community, with
restrictions that you'll have to live with. Before you borrow
$150,000, make sure that these are things you won't regret
in six months. |
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