Washington, DC is one of the few areas in the country that has coops or cooperatives. Coops differ from condos in that condos are considered to be real property. Coops are considered to be personal property because the co-operative corporation holds fee simple title of the entire property. This is why if you have ever tried to pull the public record for a unit in a coop building, you can only find the tax record for the entire building.
Are You Buying a Coop?
Generally speaking, coops offer the buyer more space than your typical condo. Also, the prices seem to be lower however, this can be deceiving because the monthly coop fee is often times higher than a condo. The fees can be higher for numerous reasons depending on the amenities of the building, but are also higher because the fee usually includes property taxes and utilities. So while you are paying less initially, you pay more on a monthly basis. If you are looking to buy a coop you need to know that not all lenders can provide financing for coops. Each building has their own list of preferred lenders. The amount needed for your down payment can also vary by building. The building's down payment requirement supercedes that of the lender. Lastly, if you are receiving any gift funds you may want to have them transferred to your account before you begin your home search. Some coops do not allow gift funds for the down payment.
The Coop Board Must Approve You
Before you can move into a coop, the coop board must approve you. As antiquated as this may sound, it is true. The coop board is basically looking to see if you are credit worthy. They want to make sure that you are in a strong financial position to pay your monthly coop fees. If you are unable to pay your portion, at some point the other members will be responsible. Although most buyers are approved by the coop board, there are instances where a buyer has been denied. If you are denied approval, the coop board must disclose why you were not approved.
Are You Listing a Coop?
If you are listing a coop make sure you have all of the information you need to give to a perspective buyer and buyer's agent. If there is an Underlying Mortgage or Blanket Mortgage that should be included in the sales price. Make a note as to the remaining balance of the Underlying Mortgage and the date it will be completely paid off. Upcoming or current special assessments also need to be disclosed. Provide a list of the coop's approved lenders, the down payment requirement, the rental policy and the pet policy. Having this information upfront will enable the buyer to make an informed decision as to whether or not they want to write an offer on your coop listing.
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