What is a Residential Home?
A residential home is considered a one to four family house and is the most common form of home ownership. The purchaser receives a deed to the home and the land that gives “fee-simple” ownership of real property. The purchaser is solely responsible for payment of all real estate taxes, insurance, utility and maintenance costs.
What is a Condominium?
Condos are found in almost all cities. The ownership of a condominium apartment is similar to the ownership of a residential home since you are purchasing real property and receive a deed to the unit. Since condos are generally found in apartment buildings, you own the interior space of your apartment outright along with an undivided portion of the building (known as the common areas or common elements) and have the right to use the common areas of the building such as the community facilities, laundry room, parking and hallways. There are generally few restrictions on your right to alter the interior of your apartment provided that it doesn’t affect the building’s structure or interfere with neighboring apartments. The condominium is governed by an elected Board of Managers whose powers are derived from a Declaration of Condominium and By-Laws. The condominium’s Board of Managers makes financial decisions as to the amount of common charges needed to maintain the common areas of the building. A condominium unit owner may mortgage the unit, similar to a residential home mortgage and pay the real estate taxes on the unit. The condominium’s Board of Managers usually does not have decision making powers as to the sale or sublet of the unit. Purchasers and subtenants of owners must submit an application to the condo’s Board of Managers. The Board reviews the application and must either approve the applicant or exercise the condo’s “right of first refusal” to match the purchase price or rent amount. Although uncommon, the option to purchase or rent the apartment from the current owner rather than have it transferred or rented to the applicant is available to the Board. Most condominiums’ policies toward subletting are more lenient than are coops’ policy which is why purchasing a condo is often a better choice for investors.
Monthly Expenses (also known as “Carrying Charges”)
Carrying Charges are the costs associated with the upkeep and operation of a residential home, coop or condo apartment and are in addition to your monthly loan payment. Carrying Charges are called “maintenance” in a coop and “common charges” in a condo and typically cover a share of the costs of operating the building such as the cost of utilities for the common areas of the building, salaries for building employees, real estate taxes and property insurance. These costs are apportioned to each coop or condo unit owner by the apartment corporation or condominium association on a monthly basis. In the case of a coop, the monthly maintenance payments also cover local real estate taxes on the building and payments on the building’s underlying mortgage. For residential home and condominium apartment owners, real estate taxes and homeowners insurance are an additional expense that should be factored into the calculation of the anticipated monthly expenses.
Contact Us and let our attorneys help with your real estate endeavors.