Traditional Condo vs Co-Op

[stitch'sgirl]

Does anyone have real life experience with this? My 87-year-old mother-in-law (widowed about a year and a half) is currently in a home. She has a renter in a detached garage. Her granddaughter just got her real estate license.

Granddaughter found a co-op close to her and her parents (and away from my family). This came up for sale yesterday and they are pushing her to buy into it now without understanding co-op. Also the HOA is an additional $500 a month.

Can any of you share your experiences? I know nothing about it either.

 

[antmaril]

I can’t comment on the co-op because I have no experience. However, I am almost 70 years old and have been widowed for 13 years. I currently own a condo. I promise you that by the time I am 87, I will NOT want to OWN anything - home, condo or co-op. Even now, I think about moving into a nice apartment. As a condo owner, I am still responsible for everything on the inside and some things outside. At age 87, when something goes wrong, I just want to call someone and know they will handle it.

Have you considered a 55 and over senior apartment complex or even Independent Living for her? What does she think?

Good luck! I hope it all works for your family.

 

[stitch'sgirl]

I can’t comment on the co-op because I have no experience. However, I am almost 70 years old and have been widowed for 13 years. I currently own a condo. I promise you that by the time I am 87, I will NOT want to OWN anything - home, condo or co-op. Even now, I think about moving into a nice apartment. As a condo owner, I am still responsible for everything on the inside and some things outside. At age 87, when something goes wrong, I just want to call someone and know they will handle it.

Have you considered a 55 and over senior apartment complex or even Independent Living for her? What does she think?

Good luck! I hope it all works for your family.

Oh thank you for your thoughts. You would never believe she is 87. She has practiced holistic medicine and tai chi, and is constantly on the move. She is very independent. She just recently got a housekeeper and I would imagine she will continue that. She is not ready for an independent living community although she did look into it. This co-op is a 55+ community.

 

[tcufrog]

I will tell you that I have many family friends around that age who were in amazing shape. It took one stroke or one fall for that to suddenly change. One of them refused to admit she was having a stroke in front of us and refused to let us take her to the hospital, which made it much worse than it should have been. She refused because she was very prideful and independent. You need to get the legal documents in order ASAP in case that happens.

 

[MillauFr]

No way I would have an 87 year old buy any real estate.

 

[Skippy918]

Is there a reason why she can’t stay in her current home? I’m assuming her home is paid off at this point? Would she be buying this co-op in cash or would she need a mortgage? Could she even qualify for a mortgage?

 

[stitch'sgirl]

Is there a reason why she can’t stay in her current home? I’m assuming her home is paid off at this point? Would she be buying this co-op in cash or would she need a mortgage? Could she even qualify for a mortgage?

She is feeling some stress dealing with the tenant and the upkeep of the exterior of the home. My father in law took care of all of that.

The co op wants cash, no mortgage. And yes, she could qualify for a mortgage. My husband ran up to her house as his sister and brother in law (the agent's parents) immediately went there to get her cash. I am just so nervous! I just feel like she is going to have buyer's remorse. She would be giving up everything she has in her current community.

 

[JLTraveling]

I don't know anything about co-ops, but hiring a property manager to deal with the tenant and someone to manage the exterior upkeep sounds like a FAR better option than buying something new just because the brand new realtor granddaughter says she should. She sounds a lot like my grandma, who didn't move into independent living until a couple of years after she broke a hip (and recovered as fast and as well as someone half her age). I hope she doesn't let herself get pushed into something she doesn't want or need.

 

[NYCgrrl]

The simplest differences I can write.

A coop gives you shares in the corporation that owns the building and possibly the land. You do not get a deed but instead a proprietary lease and stock certificate to show ownership in your unit.
You are responsible for most if not all the fixtures of the unit assigned to your stock. The corporation is responsible for repairs and maintenance of common areas. A portion of the overall taxes, water, and electricity is apportioned to your unit by how many shares you own and is paid via monthly maintenance charges.

A condo presents you with a deed to your unit and you are responsible for most everything that happens within it. A monthly common charge covers the upkeep and repair of common areas.

ETA: I have managed coops and condos and owned coops.

 

[unrequited23]

Where I live a snow plow contract, landscaper and twice a year gutter cleaning is much less than the $500/month HOA fee for the co-op. We lived in a condo with an HOA. It was self-managed at first, then changed to a property management company and our monthly fee doubled. It was discovered that the legally required cash reserves did not meet the required amount. We should have looked closer at the financials of the HOA before purchasing but were in our early 20's and didn't know better.

 

[NotUrsula]

No. And no again. No one that age who is not extremely wealthy should be sinking liquidity into real estate assets if there is a choice about it. As a PP poster said, she's in great health now, but that could change in an instant, and if it does, medical bills can mount up so fast that they will seem like a forest fire. She needs to hang on to her liquid assets. Hire a property manager to deal with the outdoor maintenance and manage her tenant.

 

[stitch'sgirl]

No. And no again. No one that age who is not extremely wealthy should be sinking liquidity into real estate assets if there is a choice about it. As a PP poster said, she's in great health now, but that could change in an instant, and if it does, medical bills can mount up so fast that they will seem like a forest fire. She needs to hang on to her liquid assets. Hire a property manager to deal with the outdoor maintenance and manage her tenant.

That's exactly what I suggested

 

[stitch'sgirl]

Where I live a snow plow contract, landscaper and twice a year gutter cleaning is much less than the $500/month HOA fee for the co-op. We lived in a condo with an HOA. It was self-managed at first, then changed to a property management company and our monthly fee doubled. It was discovered that the legally required cash reserves did not meet the required amount. We should have looked closer at the financials of the HOA before purchasing but were in our early 20's and didn't know better.

Thank you for explaining it, I appreciate it!

 

[JimMIA]

If she does decide to go ahead with that purchase, you'd better get some legal advice on the titling of the property. That will depend to a great degree on your local laws, but if she titles it Joint Tenancy Right of Survivorship, whoever is on the title with her owns the property when she passes.

That can be a good thing if it avoids probate and benefits who she wants to pass that asset to -- but that's a double-sided coin that could go completely against her wishes if everyone is not paying close attention.

You'd better also be sure the title doesn't revert to the CO-OP!

If she is just a lessee as @NYCgrrl describes above, that could very well be the case.

 

[NYCgrrl]

If she does decide to go ahead with that purchase, you'd better get some legal advice on the titling of the property. That will depend to a great degree on your local laws, but if she titles it Joint Tenancy Right of Survivorship, whoever is on the title with her owns the property when she passes.

That can be a good thing if it avoids probate and benefits who she wants to pass that asset to -- but that's a double-sided coin that could go completely against her wishes if everyone is not paying close attention.

You'd better also be sure the title doesn't revert to the CO-OP!

If she is just a lessee as @NYCgrrl describes above, that could very well be the case.

With all due respect I’ve never heard of the shares (coops do not have titles) reverting back to the coop. Either they are owned jointly as you noted or they revert to the estate of the shareholder. Some coops limit how many joint tenants there can be as well and gear it to the size of the unit.

My mother owned the coop I currently live in and had she written a will the process would have been easier with minimal input from the courts.

I always suggest prospective purchasers retain a lawyer to close as they are there to protect their interest.

 

[JimMIA]

With all due respect I’ve never heard of the shares (coops do not have titles) reverting back to the coop. Either they are owned jointly as you noted or they revert to the estate of the shareholder. Some coops limit how many joint tenants there can be as well and gear it to the size of the unit.

My mother owned the coop I currently live in and had she written a will the process would have been easier with minimal input from the courts.

I always suggest prospective purchasers retain a lawyer to close as they are there to protect their interest.

Depends on the law in the state.

We have some in Florida, run by legitimate non-profits, who own the property and everyone who lives there is only a tenant. On their demise, the property reverts to the co-op. We knew a woman who paid $200+K, moved in, and then died 4-5 months later. $200K for nothing.

 

[NYCgrrl]

Depends on the law in the state.

We have some in Florida, run by legitimate non-profits, who own the property and everyone who lives there is only a tenant. On their demise, the property reverts to the co-op. We knew a woman who paid $200+K, moved in, and then died 4-5 months later. $200K for nothing.

Those are called HDFCs in this area and they've all sorts of quirky rules and regulations but the initial funds are paid back to the tenant(s) or estate, first. At least in NJ, CT, and NY. I can’t figure out why FL would allow a coop to keep the funds but yes life is different from one state to another.

 

[JimMIA]

Those are called HDFCs in this area and they've all sorts of quirky rules and regulations but the initial funds are paid back to the tenant(s) or estate, first. At least in NJ, CT, and NY. I can’t figure out why FL would allow a coop to keep the funds but yes life is different from one state to another.

OK, you win.

 

[_19disnA]

they are pushing her to buy into it now without understanding co-op.

For that reason alone, I would say NO and advise against buying into it.

Lots of people have also bought timeshares from pushy sales people and later learned to regret that decision as well.

 

[trip]

If the newly licensed granddaughter is pushing the sale without the family help solve any problems so she can stay were she is I’d say no. Reminds me of a cousin, who after he got his insurance license went to every relative he could think of and tried to sell them a policy. Then got angry if you turned him down.