Chapter 16 Condominiums And Cooperatives Flashcards Preview

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Flashcards in Chapter 16 Condominiums And Cooperatives Deck (35)
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1
Q

What is a cooperative?

A

When people join to own or control the housing and related facilities in which they live. The cooperative is a non for profit corporation.

2
Q

Is a cooperative a fee simple ownership?

A

No

3
Q

In cooperative ownership the lessees pay a monthly fee which is what?

A

A maintenance fee and rent

4
Q

What is the board of directors?

A

The board overseas the maintenance,finances,and policy decisions of the corporation.

5
Q

What are the two basic legal obligations that the board of directors have?

A

Board must follow the co-ops internal rules that are stated in the bylaws, the proprietary lease,the certificate of incorporation and the house rules.

They must exercise good business judgment in making decisions.

6
Q

What does it mean to understand a financial statement?

A

Looking into background.

7
Q

Explain underlying mortgage?

A

When the owner determine what type of mortgage exist.

8
Q

Explain a reverse fund ?

A

Variable expenses (gas leak or accidents)

9
Q

Do both condos and coops have reserve funds?

A

Yes

10
Q

What is a flip tax?

A

A charge levied when units change hands. But not all cooperatives charge a flip tax.

11
Q

What are the documents needed for the sale or purchase of cooperatives?

A

Articles of incorporation,bylaws,proprietary lease, or occupancy agreement , subscription agreement and house rules.

12
Q

What is a proprietary lease and when is it presented?

A

Generally a long term lease or estate for years and the seller delivers at the closing.

13
Q

Who files an offering plan?

A

The developer who constructs a cooperative or converts a building into a cooperative corporation.

14
Q

What does a offering plan include?

A

A declaration and disclosure statement with the New York Attorneys general office which gives approval.

15
Q

Before approval the first part of the declaration includes what?

A

The scope of the project a description of the corporate setup.

16
Q

What is the first part of the review called?

A

Preliminary prospectus or red herring.(before approval)

17
Q

Once the Attorney general accepts the Prospectus for filling it is known as what?

A

Black book or offering plan.

18
Q

What are house rules?

A

Kinda like deed restrictions and covers issues such as garbage disposal maintenance noise and conflict resolution.

19
Q

What are alteration agreements?

A

Describes the term under which the cooperative gives permission to a shareholder before making any changes or improvements to the apartment.

20
Q

What is a board package ?

A

Financial documents which includes tax returns, employment verification, bank statements,loan commitments, social security, and identifies who will be living in the apartment.

21
Q

What is the type of loan in which shares of stock serve as collateral?

A

A share loan.

22
Q

What is a Recognition agreement ?

A

It describes the relationship between the cooperative and other entities. These entities include government agencies and financial institutions.

23
Q

Who signs a Recognition agreement? And what is the agreements understanding?

A

A lender signs it with the cooperative corporation.

Is understanding between a cooperative and the lender that provides share loans to the cooperative shareholders.

24
Q

What else does the Recognition agreement do?

A

Outlines the responsibility’s between the cooperative corporation and the lender and describes the actions by each party if a shareholder/member defaults on the loan.

25
Q

What is a Condop?

A

A building that includes condominium and cooperative ownership in the same structure.

26
Q

What is the IRS 80 20 rule (the IRS Regulation?

A

This means for a shareholder in a cooperative to qualify for the same tax benefits available to other residential property owners at lease 80% of the cooperative gross revenues must be from its shareholders.

27
Q

What is a Condominium?

A

A structure of two or more units. The interior space is individually owned.

28
Q

What is Common Elements?

A

Remaining property which are owned in common by the owners of the individual units.

29
Q

What is a sponsor ?

A

The owner or developer of the condominium.

30
Q

What is hidden cost?

A

This occurs when a purchaser believes he or she is reviving one item but receives something else.

31
Q

What is a Letter of intent?

A

An agreement to purchase a condominium. It’s the same as a Cooperative Subscription Agreement. A written offer to reserve a specific unit that may be under construction.

32
Q

What is the CPS1 and how long does it last?

A

It is the Cooperative Policy Statement and the period last 120 days and the developer can request a extension of 60 days.

33
Q

What is flipping?

A

Buying a property at one price then selling for a higher price.

34
Q

What do Condominium documents include?

A

Covenants , Conditions , and restrictions.

35
Q

What is a Mansion tax?

A

A 1% tax from home buyers who purchase a 1,2,3 family home or an individual condominium or cooperative unit for 1 million or more.