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发帖数: 731 | 1 Understanding Property Types
Table of Contents
Introduction
Condominiums
Townhouses
Garden Conversions
Condominium Home Owners Association
Covenants, Conditions and Rules
Management Companies
Understanding Condominium Fees
Yearly Budget - The Monthly Maintenance Fee
Special Assessments
Cooperatives
Planned Unit Developments
Benefits of Condominium Living
Who Should Consider Condominium Living
Pros to Condominium Living
Introduction
Condominium, Cooperative and Fee Simple are “methods of ownership”, and
are sometimes confused with being “building types”. There are important
legal differences between each that should be understood by the potential
buyer of each type. Below is a basic definition of each term, and things to
consider when purchasing these types of properties.
Condominiums
Condominium is a legal definition for the “method of ownership” of real
estate; it is not the type of a building! Ownership in a condominium
community generally means you own title to the interior space of your unit,
and jointly own the land and all of the other physical and mechanical
structures supporting the infrastructure of that community. These supporting
structures include such items as; elevators, hallways, recreational
facilities, outside grounds, parking areas and usually exterior aspects of
your unit like the roof and siding of the buildings. These are for the
shared use of all residents of the community and are called "common elements
".
Townhouses:
Townhouses, sometimes called town homes, are the same “method of ownership
” as condominiums, where you own the individual unit along with the
undivided interest in the common grounds of the community. Typically a
townhouse dwelling is multi-floor and you may own the actual structure,
rather than just the air space within the unit. Condominium units tend to be
single floor, and setup more like apartment units where townhouses tend to
be units which may have common walls with their neighbors, but have no one
above or below them.
Garden Conversions:
As the term “conversions” implies, these are typically “Garden Apartment
” complexes that have been converted to be condominium complexes. Garden
Apartments implies that some or all apartments have direct access to lawn
areas. In Northern New Jersey these tend to be two floor brick buildings,
with many single floor apartments in each physical structure. The owner of
the apartment complex decided to convert the ownership of the apartments to
individual condominium units, whereby the ownership and maintenance is
handled no different than how it is handled for normal Condominium complexes
.
However, usually the maintenance fee in these type of complexes includes
such items as heat, hot water, gas, etc… As this is how the physical plants
for these structures were setup when the buildings were built for their
original purpose, being rental apartments. In all likelihood, you would have
a separate electric bill, and possibly a separate gas bill.
These units tend to cost less than equivalent space in newer condominium
complexes and are a great value for the money. They are usually studio, one
and two bedroom units, however you may find a townhouse or three bed room
unit from time to time.
Condominium Home Owners Association:
Also known as HOA, is an organization of homeowners residing in a community
whose purpose is to ensure the provision and maintenance of community
facilities and services for the common benefit of the residents. They are
usually guided by the CC&Rs (Covenants, Conditions and Rules)) of that
community, and generally work with a management company to run the day-to-
day operations of the community.
Covenants, Conditions and Rules:
Also known as CC&Rs, dictates the restrictions governing the usage of your
property; usually enforced by a homeowners association. It covers such items
as physical attributes of the buildings, landscaping rules, and even
whether or not you can have pets and what size they may be. If the property
is governed by a set of CC&Rs, the buyer must be notified of them prior to
the sale completion of the property.
It should be noted that CC&Rs are not just necessarily for Condominium and
Cooperative communities. They may also apply to PUDs and Fee Simple
properties.
Management Companies:
Even though the overall responsibility of the management of a condominium
community is up to the HOA, the HOA generally does not have the time or the
wherewithal to manage the day-to-day operations of the community. Some
communities do “self-manage” their complexes, but most do hire a company
that specializes in handling the operational issues of the community.
Operational issues can include the handling of the various contractors that
do the maintenance in the community (such as landscaping and snow removal),
hiring contractors for periodic or emergency repairs, and just for handling
everyday calls from the various residents of the community. Some communities
go as far as hiring a full time individual to handle their complex.
No matter how the community management is handled, the community manager
reports to the HOA.
Understanding Condominium Fees:
As Condominium communities have common grounds that all unit owners have an
interest in, the unit owners are obligated to pay a maintenance fee to help
maintain these common areas. This generally includes:
· Maintenance of the external building and common building structures
· Ground keeping, such as landscaping, snow removal and repairs
· Community amenities such as pool, clubhouse, play area, gym and
gardens
· Common utility costs, such as watering of lawns, sewage and garbage
pickup and electricity
· Contributions to maintaining the capital improvement reserve funds
o This fund is used for major capital improvements, depending upon the
community, this may include roofing, siding, streets, sidewalks, fences,
elevators, and any other infrastructure or physical aspects of the common
areas
Yearly Budget – The Monthly Maintenance Fee
The yearly budget of the community covers the day-to-day maintenance of the
complex. The yearly budget is funded by the normal assessment to the unit
owners, commonly known as the monthly maintenance fee. Day-to-day
maintenance items include such things as:
· Landscaping (cutting the lawn, cutting the shrubs, watering lawn,
…)
· Snow removal (plowing, salting roads, …)
· Painting (painting trim, hallways, …)
· Management company fee
· Clearing rain gutters
· Miscellaneous repairs to the common property
· Maintaining amenities such as pool, tennis courts, club house
· Maintaining the capital reserve funds
· …
Special Assessments:
From time to time, the HOA is faced with a cost that is not in the present
budget or within the ability of the capital reserve funds to cover. This is
usually due to certain costs going beyond what was reasonably expected or
because of some sort of unforeseen expense. When this occurs, the HOA needs
to assess each unit owner a share of the overall cost to make up the
difference in the yearly budget or the capital reserve funds.
Budgeted overruns can be understood in variable costs, such as snow removal
fees. When the yearly budget is prepared, the HOA attempts to estimate
reasonable forecasts of snow removal fees; however, if it is an unusual
winter, snow removal can easily go beyond what was forecasted. In this
situation, the HOA will assess the unit owners with the difference in cost,
and put together a reasonable payment schedule to recover these costs and
put the communities budget back on track.
Other costs may actually affect the capital reserve funds; such items as not
enough funds for roof repair, new sidewalks, to unforeseen items, such as a
pre-mature problem with the building siding. The HOA should be maintaining
a current reserve study, which should be performed by an engineer to
determine whether or not the capital reserve funds are adequate to cover the
mechanical and structural common elements of the community. This study
should be performed periodically, usually on a 5 year basis. If it is
determined that the capital funds will not cover future costs, then the
monthly maintenance fee will most likely be adjusted for a finite period of
time to bring the capital reserve funds inline with what the study indicates
is necessary to properly maintain the property. It is also possible that
the HOA would request these funds in a separate payment schedule. In either
case, the special assessment payments should be clearly indicated to the
present owner or perspective buyers.
Note: When purchasing a Condominium/Cooperative/PUD, be sure to have your
lawyer check for any existing special assessments and/or planned special
assessments. The Seller is required to inform you of this, and you could
take this into account with your offer for the property.
Cooperatives:
Cooperatives, or commonly nicknamed co-ops, are a completely different type
of real estate ownership to Condominiums or Fee Simple. In a cooperative,
you do not actually own the title of any real estate; you own shares or a
membership in a cooperative housing corporation. The corporation actually
owns the real estate, and you own a certain amount of shares within that
corporation. For your shares (or membership) you have an exclusive right to
live in a specific unit within the complex. As in a condominium, there are
maintenance fees and Covenants, Conditions and Rules you must abide by in
order to maintain your right to continue to live within your assigned unit.
There are many types of cooperatives, but their explanation is beyond the
scope of this site. For full details on the various ownership types, please
refer to the NAHC (National Association of Housing Cooperatives). Assuming
that the cooperative you are interested in is a Market-rate housing
cooperative, your membership or shares will reflect the going market value
similarly to that of a condominium or single-family (fee simple) property.
Your maintenance fees typically cover the same items as they would in a
condominium community with the addition of paying your share in the
corporation’s taxes and the blanket mortgage payments. See Understanding
Condominium Fees for details on condominium maintenance fees.
Planned Unit Developments:
Also known as PUDs, is basically a subdivision that has a modified set of
plans and zoning criteria that do not necessarily follow the standard zoning
classifications of the master plan of the local governing authority (
township, …). A developer typically applies for a variance to the master
plan in order to develop the private and common areas to that subdivision.
The variations to the master plan of the local governed area may include
such items as; setback changes, street lighting, housing density/clustering,
building architecture, land coverage ratios, common area park and amenity
designs.
Unlike a Condominium and Cooperative community, the individual property
owners own the land underneath their homes. However, they also have a
maintenance fee for handling the care of the common areas. This fee is
generally not as high as those set by Condominium and Cooperative
communities.
Benefits of Condominium Living:
What is the attraction of living in a Condominium, Townhouse or Cooperative
community? The answer to this really depends upon each individual’s
circumstances. There was a time in my life that I would never have dreamed
of living in a townhouse, I wanted a single family home of my own, and after
22 years of living in a great home in Upper Montclair, I decided it was
time to live in a Townhouse community. Why? Peace of mind, less maintenance
headaches, newer structure, beautifully taken care of grounds throughout the
community.
Who should consider Condominium Living:
There are pros and cons to every piece or real estate, and these pros and
cons change for each of us as our life circumstances change.
Empty nesters who have the desire to downsize
Those interested in a second or vacation home
The busy professional who has very little time to maintain his/her
property
First time home buyers
Pros to Condominium Living:
Usually there will be a lower price for the equivalent or similar
living space in a fee simple home, especially in a desirable area.
Exterior maintenance is usually taken care of for you, such as snow
removal, landscaping, roof and exterior walls, sidewalks, pavement, and so
on.
Amenities vary in each condominium community, but in all cases, you
will share the cost of maintenance costs, potentially giving you more than
you would be able to afford on your own. Items that may be included are
clubhouses, pools, tennis courts, professional landscaping, …
Home owners association and management company to maintain the
property.
Security peace of mind. Having neighbors in close vicinity to your
unit can add a security factor to your property you might not have in a
private home. This peace of mind is not just for when you are at home, but
on vacation as well.
Uniformity of all properties in the community, not having to contend
with that old shack or rusting cars that might be in your neighbors home.
Your home insurance will be less, as you usually are just paying
from your units walls in; meaning that the exterior of the building and all
of the common grounds insurance costs are shared by the entire community and
is in your maintenance fee.
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