LETTERS TO EDITOR
Buying Condominium Units Versus Co-op Apartments: Pros and Cons ARTICLE BY C. JAYE BERGER, ESQ.
Most new buildings these days are condominiums, as opposed to cooperative apartments or straight rentals. Condominiums are like owning a house. There is a recorded deed. In a co-op, there are shares of stock and a stock certificate. If you purchase in cash, the stock certificate can just be kept in a safe place. If you get a bank loan, the lender holds the stock certificate for security. Most people who own shares live there. Subletting is allowed, but there are usually strict requirements, time limitations and sublet fees. While co-ops are very rarely owned by corporations or trusts, condo units often are owned by limited liability companies (LLCs). They may be formed by the individual who lives there or by a company.
They can and are purchased by many owners as investment properties. Many clients form limited liability companies to own them, which makes it easy for celebrities and high profile people who do not want their identities to be known to shield themselves from public property records. The actual unit owners often do not live in them and instead rent them out to others. Many of the units are owned by people who live in other states or other countries. This is so frequently done, that condominiums sometimes have problems with having too high a percentage of the units being rented out to satisfy lenders. Sometimes different members of the family that owns the unit stay in the apartments at different times like a hotel. This worries people because they see different people with keys to the front door. Managements needs to keep track of such things. They may give their proxies to others to vote for them on issues before the Board of Managers at annual meetings. This can create a disparity between the interests of the people who own the units and those renting them and actually living there. Thus, many condominium buildings are a combination of condominium units and freemarket rental apartments with tenants. There are no restrictions on the amount of rent that can be charged to these tenants, other than what the market will bear. Co-op apartments, by contrast, tend to have very personally involved owners who live there. Since condos 16
can be owned by a company, there may be property mangers running them and the people in the unit next door unit are just renters. Co-ops increasingly have problems with absentee owners whose children live in them and have loud parties. These kinds of issues can be handled through the proprietary lease. In the face of these kinds of fluctuations, condos have tried to model themselves increasingly after co-ops which have stricter acquisition, sublet and renovation requirements. Ownership of pets is a big difference between co-ops and condominiums. For example, many people buy condominiums, specifically because they can own pets, especially large dogs. Co-ops are more restrictive about the number, size, weight and type of pets. As certain buildings have had problems, they have become increasingly restrictive. For example, when dogs start barking for hours on end and are aggressive towards neighbors, the Boards ask legal counsel about enacting fines for barking and having other restrictions. Boards and unit owners try to strike a balance so that their building is a desirable place for all the occupants to live in. Everyone had heard stories about famous people whose applications have been rejected by co-op boards. Condos cannot reject applicants who can afford to purchase the units. They only have the right of first refusal, meaning, they can buy it themselves. To address this, some condo boards have applications which must be
