Co-ops and condos are distinctly important in New York because of how common they are. The exam tests the structural and legal differences between them.
In a co-op, residents own shares in a corporation that owns the building. Each shareholder receives a proprietary lease granting the right to occupy a specific unit. The co-op board can approve or reject prospective buyers (subject to fair housing laws). Shares are personal property, not real property.
In a condo, each owner holds title to their individual unit (real property) plus an undivided interest in the common elements. Condo boards cannot reject buyers outright (only exercise a right of first refusal in some cases). Condo units are financed with standard mortgages.
Co-op: personal property (shares + proprietary lease), board approval required, financing through share loans. Condo: real property (deed), no board approval, standard mortgage. Co-ops are more common in NYC; condos are more common outside NYC.
Both co-ops and condos must file an offering plan with the NY Attorney General before units can be sold. The plan discloses the building's financial condition, projected expenses, and unit details. The AG's office reviews for completeness but does not approve the investment itself.
1. A buyer purchases a unit in a Manhattan co-op. What documents evidence their ownership?
In a cooperative, the buyer does not own real property. Instead, they own shares of stock in the cooperative corporation (evidenced by a stock certificate) and receive a proprietary lease giving them the right to occupy a specific unit. There is no deed and no traditional real property mortgage in a co-op purchase.
2. Which of the following BEST distinguishes a condominium from a cooperative?
A condominium owner holds fee simple title (real property) to their individual unit and an undivided interest in the common elements. This is conveyed by deed. A co-op owner holds personal property (shares + proprietary lease), not real property. Common charges in a condo do NOT include property taxes — condo unit owners pay their own real estate taxes separately.
3. A co-op owner's monthly maintenance is $2,800. This amount includes which of the following?
In a co-op, the monthly maintenance fee covers the building's operating expenses AND the shareholders' proportionate share of the underlying building mortgage AND the building's real estate taxes. This is fundamentally different from a condo's common charges, which cover operating expenses but NOT the unit owner's individual taxes or mortgage.
Condominium
A form of ownership in which individuals own their individual units in fee simple and share ownership of common areas.
Cooperative (Co-op)
A form of housing ownership where residents buy shares in a corporation that owns the building, rather than owning their individual units.
Offering Plan
A legal document filed with the NY Attorney General that discloses all material information about a condominium or cooperative offering.
Proprietary Lease
The lease agreement between a cooperative corporation and a shareholder-tenant, granting the right to occupy a specific unit.
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