For many reasons, condominiums are
generally more marketable than co-ops which is why stock cooperatives and
community apartment (i.e. own-your-owns) projects often convert to condominiums.
Although there may be many reasons
for converting, the primary incentive is greater ease of financing which leads
to higher property values. Instead of a single mortgage on the entire property
with shares of stock held by tenants (the stock cooperative model), members
actually own real estate in the form of air space bounded by the walls, ceilings
and floors of a unit. This gives owners more conventional collateral for a loan,
which makes it much easier to finance as well as buy and sell units. The
benefits are summarized below:
Lenders are more willing to lend higher amounts for condominiums than co-op
apartments, and rates charged by lenders for residential mortgage loans are
generally lower than rates for underlying co-op building mortgages.
buyers of condominiums don't have the rigorous purchase application and
interview processes that co-ops do.
Lower Dues. Dues are
lower because a condominium association's operating budget is generally
lower than a co-op's (because it does not include property taxes which are
paid by individual owners).
The downside to conversion is the
initial cost of the conversion itself. The fees for lawyers and engineers, title
insurance, mortgage costs, and other associated costs can be
significant. However, the resultant increase in property values can also be
significant. Because condominiums have a wider market appeal, they generally
sell for 15 to 25% more on average than co-ops.
: Associations needing legal assistance can contact us
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