The Benefits Of Cooperative Ownership

The most frequently asked questions about Cooperative Ownership

A. Housing cooperatives are corporations whose specific purpose is to provide housing for their members, who are stockholders in the Co-op corporation. Buying a share, usually known as a membership certificate, entitles the purchaser to hold a proprietary lease, commonly known as the occupancy agreement. The occupancy agreement gives the purchaser the exclusive right to occupy a dwelling in the development and to participate as a member in the operation of the co-op. Housing co-ops traditionally function under the same principles that guide all other types of cooperatives: open membership, with no restrictions as to race, religion, sex, or age; representative democratic control, with each member entitled to one vote in electing directors who administer the co-op's operation; and limited return on capital, with charges determined by actual costs. Monthly payments may be called carrying, housing, or occupancy charges; they are not rent.

Q. What advantages does co-op living offer?

A. The most often cited advantage of co-op living is economics. Co-ops are founded on the premise that cooperation leads to better services at a lower cost, and co-op charges are usually lower than those for similar rental units. Cooperators pay actual housing costs, not a landlord's profit. Furthermore, they are eligible for income tax deductions for their share of the mortgage interest and property taxes paid by the co-op. Co-ops often have fewer vacancy and collection problems than other similar forms of multi-family housing and thus, lower per-unit maintenance and operating costs.

Q. What is the difference between a condominium and a cooperative?

A. The main difference is that in a condominium you receive a deed to your individual unit. In a cooperative, you receive a share of stock in the corporation (the building) and then lease your unit from the corporation. The stock is not transferable but can be willed to anyone at time of death.

Q. Do you get tax benefits like a condo?

A. Yes. You can deduct a percentage of your mortgage interest payment and your share of the real estate taxes. Approximately 34% of your monthly fee is a tax deductable expense.

Q. What happens if I decide to sell my unit (apartment)?

A. The building association has the right of first refusal to repurchase your apartment. To date, the building association has always repurchased every apartment without exception.

Q. Who sets the selling price of apartments?

A. The selling price is determined by a fixed formula based on a combination of appreciation, the current consumer price index and other variables in the marketplace. Appreciation on equity has averaged about 5% per annum.

Q. Can I trade-up or change my apartment?

A. Yes. You may trade-up or down, or change your unit based on availablility and your position on the waiting list. Also, an administrative fee is charged when transferring between apartments.

Q. Is parking included?

A. On-premise parking is available to all residents of the building for an additional fee. Resident parking fees are substantially lower than those for the general public.

Q. Are utilities included in my monthly carrying charges?

A. Yes. All utillities are included. Basic cable service is included, however, phone service and premiuim cable channels are not.

Q. Are there any additional charges?

A. The only additional charges are for the use of the pool and fitness center. Use of these facilities is optional and the costs to residents are very nominal.

Q. What other activities are available?

A. There are a variety of on-going and special activities available to residents, such as the monthly bridge club or travel club. In addition, the building maintains an in-house library and publishes a monthly newsletter to keep residents informed of all activities, building news, and special events. Residents also have the ability to rent the community room for their own social functions.

Q. Is financing available?

A. Yes. Financing is available on up to 75% of equity in the apartment. Loans may be obtained on a fixed rate basis for up to 15 years at extremely competitive interest rates. Administration fees are not included in the financing program.

Call Bob Mulloy or Colleen Danks (215) 568-4926