Buying A Condo
Any real estate purchase is a major decision, but when buying a condo one must investigate the options thoroughly to avoid future problems.
Buying a condo is similar to buying a home in that the buyer holds a mortgage and pays property tax, but what the buyer owns is the air space between the walls of the condo and shared ownership of the common areas of the community which can include swimming pool, meeting room and work out area.
If a condo owner falls behind in payments, the mortgage holder can reclaim the property, which affects only the owner. The owner can work with the lender in order to keep his property.
Co-op buying constitutes the buying of shares in the company that owns the building. The buyer does not hold a mortgage nor does he pay property tax but still has use of the unit and common areas of the community.
If a co-op owner falls behind in payments, it affects the entire community and the shares can be taken away, leaving the owner with nothing to show for his payments. The company can remove an owner more easily than a mortgage lender can.
Mortgage lenders are more apt to loan money for a condo rather than a co-op because it is actual real estate rather than shares in a company. In both condo and co-op ownership, there is a board made up of the owners who make the rules for the community. In a condo, the board has less power over the individual owners lifestyle, while in a co-op, the board usually has stringent rules about owning pets, subletting, or remodeling the unit.
Things to look for when wanting to purchase a condo or co-op:
- Inspect the building to see if it is well kept. Include all common areas in this inspection.
- Find out if there are more renters than owners living in the building. If there are more renters, the building may not be kept as well since the owners are not around to make sure that it is.
- Review the rules carefully to see if you can live with them because they are enforced.