Shared ownership is not for everyone says Poliakoff. For example, say you’re a musician who likes to practice at all hours, a socialite who entertains a lot, or if you don’t like people telling you whether or not you can have pets, and what changes you can make to your unit.
So you’re ready to buy a place, and you’ve decided on an apartment rather than a single family house. Do you go co-op or condo? Gary Poliakoff, an expert on shared ownership communities (which includes condominiums, time-shares, cooperatives and homeowner and property owner associations) lets us know the consequences of living in close confines with others.
What’s the biggest difference in buying an SOC?
One main difference is your maintenance is not fixed. It’s not going to stay constant throughout the time of ownership. Your share of expenses is going to change based upon what the costs are to maintain the building. And if some owners are not paying their share you are still going to be obligated to pick up the short falls.
How do you know if these financially unstable people are your new neighbors?
You need to ask, and it’s a little bit of due diligence. I suggest the buyer check public records to see if there’s evidence of a large number of foreclosures being filed in a building.
What’s the difference between a co-op and condo?
In a cooperative you really don’t own real estate, you own shares in a corporation, which owns a building. In a condominium you actually receive a simple title, you receive an interest in real estate. You get a deed to your unit. And it’s treated like any other real estate — meaning property that can be hypothecated.
Everyone says condos are better. Is that true?
You have rules and regulations that apply equally in both. So when you buy, it’s critical that you read those regulations — they are enforceable. If they say no pets, it means no pets. The reason condos are more in favor is because there’s an issue of alienation when you buy into a co-op.
Co-ops can actually dictate who you sell to. Some famous people — Andy Warhol, Madonna — have been rejected by cooperatives. A condo is easier to sell because it doesn’t have the same restrictions you have in a cooperative. Also, if you are buying in a co-op you have to come up with a larger amount of cash to buy. And with condos you can take equity out of your unit.