Expert: Hans Weber, Licensed Broker Associate - 6/30/2004

Question
Have you heard of a co-op failing, and what was the inpact on the owner
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Followup To
Question -
Are there pitfalls in buying a coop, And if there are pitfalls what are they?


Answer -
Hi Andre,

Thank you for your question.

Coop ownership is a little different than condominium ownership.  Coops are usually rental buildings that have been converted to cooperative ownership.

With a condo you actually own the unit you live in.  With a coop you own by way of shares of stock a portion of the total complex and have a lease for the right to occupy your unit.  Coops usually have a board of directors which will approve of disapprove all new owners.  Condos usually do not.  They both have rules that need to be followed.

Coops are usually less expensive than condos and often heat, water are included in the monthly maintenance.

I hope this helps you.


Hans  

Answer
Hi,
Thank you for this question.

I have not experienced a coop failure or bankruptcy in Westchester.  However, there are some coops that banks will not finance apartment sales reason being there are too many unsold units occupied by renters.
Like any business a coop can make or lose money every year and has income from maintenance and flip taxes and has expenses for fuel, property maintenance and repairs, insurance etc.  Some coops are healthier financially than others.  
If you are buying a coop you will be protected from shakey coops by the bank which will not lend you their money if they are worried and by your attorney who will review the financial statements for you and advise you not to buy a shakey coop.
If you are the owner of an apartment in a failing coop you need to stop the failing.  Raise the maintenance, have a special assessment, refinance the mortgage, sell your apartment.

Hope this heads you in the right direction.
Hans