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Ownership
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Ownership is the right of one or more persons to possess and use a
property to the exclusion of others. It is basically a
title to property & the highest legally protected real right.
The owner has the ability to use, control, transfer or otherwise enjoy the resources on that land as long as national or local law allows those activities.
The
basic types of ownership are as follows:
- Absolute:
Ownership is absolute when a single person has control over it.
- Qualified:
Ownership is qualified when it is shared with one or more persons.
- Joint
Tenancy: Ownership is called
joint tenancy when two or more persons owning and holding title to property with one and the same interest. When one person dies, the remaining owner(s) has right of survivorship to the deceased person's interest in the property.
- Tenancy:
Ownership is called tenancy when each owner holds an undivided interest in the property. Unlike joint tenancy, there is no right of survivorship.
The different forms of ownership available to purchasers
are as follows:
1.
Cooperative: In this form of ownership, the operating, maintenance and control are exercised by a governing board elected by the stockholders. Legal ownership of the entire property is vested in a corporation. Stockholders of the corporation are given the right to occupy specific units. The corporation
issues to each shareholder a "proprietary lease" which gives the shareholder the right to occupy their specific apartment. Originally, each unit is assigned shares based on an appraisal. In addition, the corporation elects a board of directors who are responsible for overseeing the daily operations of the building, enforcing the by-laws, and acting of behalf of the shareholders to ensure that the building operates as an efficient entity. Owners pay to the Coop a maintenance fee, which pays for such items as; the buildings Real Estate Taxes, underlying mortgage, payroll, management fees, supplies and general
maintenance. The owner of a cooperative unit is the holder of personal property (capital stock) rather than real estate, which is owned by the cooperative corporation. The owner is not able to place a mortgage on his unit but can borrow on a personal basis using shares as collateral. While the sale of cooperatives has traditionally been considered transfers of personal property, the trend is toward treating these transfers as real estate transactions and subjecting them to applicable real estate transfer and gains taxes.
As this form of ownership regards owning stock in a private corporation, approval to purchase such shares of stock must be granted by the board of directors. Thus, a purchase application must be submitted to the board requesting approval to purchase these
shares. In addition, the board will require an interview in order to meet you and make any inquiries regarding the information you submitted or questions they may have. The board has the right to approve or deny any applicant without cause.
2.
Condominium: In this form of ownership one owns "Real Property" much like owning a house. A typical description of a condominium is several residences within one building or a multi-unit building on one tract of land where fee simple title (divided interest) to an individually owned unit is combined with joint ownership of common areas of the structure and land such as the halls, stairwells, basement,
etc (undivided interest). The condominium residents elect a "board of managers" who are responsible for overseeing the operations of the building and enforcing the "house rules" of the building.
Expenses of management and maintenance are divided among owners, according to their ownership percentage.
A condominium unit denotes a separate ownership and title and allows for formal filing and recording of a divided interest in real estate. The unit may be separately sold, leased, mortgaged, or handled the same as any individual piece of real estate. Each homeowner receives a separate property tax bill from the city for their unit. In addition, each owner pays a "common charge" to the Condominium association to pay for such items as: payroll, building maintenance and supplies, management fees, and building repairs. In addition, some condominiums maintain a "reserve fund" in order to pay for major repairs and improvements to the building. It is important to note that although the Real Estate Taxes you pay on a condominium apartment are tax deductible, the common charges are not as they are solely to pay for the building operation and are not attributed to any tax deductible expenses.
In most condominiums, the owner has the right to sublet or sell their apartment with either no board approval or with a minimum board review. In either case, the board must either approve the applicant or exercise their right of first refusal to match the purchase price. For this reason this form of ownership is very appealing to
investors & normal buyers.
3.
Cond-Op: A Cond-op is a residential Cooperative where the ground floor (typically commercial units) is converted into a separate "condominium" which is either owned by an outside investor or the original sponsor of the building. Thus, although the residential units are a coop, the commercial units are owned as a condominium by an entity other than the coop. Thus, the coop does not receive the benefit of the income from these units.
Generally people will refer to Cooperatives that operate under Condominium rules as "Cond-ops". This is not accurate although you will hear this quite often. A Cooperative that operates under condominium rules is just that but may be inaccurately referred to as a "Cond-op".
4.
Townhouse: This form of ownership provides the owner with a "fee simple" ownership of Real Property. The owner is responsible for payment of all Real Estate Taxes, maintenance and repairs of the property. The sale of the property may be conveyed to any party without prior approval by anyone other than the homeowner. There are two typical types of Townhouses; single family and multiple family. In a single family the property may only be occupied by one family although the entire house may be rented to another single (or family) user. In a multiple family residence, the owner may occupy (or lease out) one of the units while leasing out the other units as income producing entities.
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