Frequently Asked Questions
- How much do I have to pay to convert my unit to a condo?
- What type of loan can I get?
- What if I don’t want a mortgage?
- Is there any difference in the way the building will be managed and maintained as a condo versus co-op?
- How long will the conversion take?
- What happens at the meeting of shareholders and thereafter?
- What happens if I do not redeem, and most, if not all other shareholders do?
- What happens if I don’t want to convert?
- Why would I want to convert to a condominium?
- After I convert, what am I responsible for and what are my rights?
How much do I have to pay to convert my unit to a condo?
Answer: To
convert your unit to a condo you must redeem your shares, pay your proportionate
share of the underlying mortgage and all closing costs relating to the
conversion. Your portion of the underlying mortgage are based on your
outstanding shares. Closing costs will include the following: legal fees, non
refundable working capital (normally two months of condo maintenance fees), title insurance premiums, loan fees and expenses and escrow requirements. In
addition, you must payoff your share loan, if you have one, because your share
lender has a security interest in your shares, which will be cancelled. Consult
your own bank/share lender for the figures that you will need at closing. In
most cases, the redemption process can be structured to be "CASH FREE"
to the shareholder. Your ROA HUTTON advisor will assist shareholders in securing
condominium mortgages at favorable terms to finance their conversion. For most
resident shareholders, monthly housing costs will remain the same or in many
cases be reduced.
Back to Top
What type of loan can I get?
Answer: Working
with a mortgage company, we will seek project approval by Fannie Mae. Assuming
that we receive project approval, a full range of competitive mortgages will be
available such as adjustable rate loans, fixed rate loans and cash out
mortgages. There is no obligation for you to obtain a loan made through us; you
may obtain your own financing independently.
Back to Top
What if I don’t want a mortgage?
Answer: You do not
have to apply for a mortgage. You may pay your pro rata share of the cooperative’s
debt and the closing costs in cash.
Back to Top
Is there any difference in the way the building will be managed and maintained as a condo versus co-op?
Answer: The
building's management will not be any different as a condominium. Under the
master deed, the condominium association will be responsible for the same common
areas that are currently being maintained by the co-op. You as a co-op shareholder
or as a condominium owner will still be responsible for the maintenance of your
individual unit. Staffing and security and other services will remain identical
to those provided currently as a co-op.
Back to Top
How long will the conversion take?
Answer: Generally, a conversion takes place anywhere between
six and nine months.
Back to Top
What happens at the meeting of shareholders and thereafter?
Answer: The Board of Directors will schedule a Special Meeting by the shareholders to vote on whether or not to dissolve the cooperative and convert to a condominium form of ownership. This vote does not guarantee that the Board will dissolve the corporation, but allows them to pursue that objective. If, at any time after the vote, the Board determines that the conversion option is no longer in the best interests of the Shareholders, then the Board will not dissolve the cooperative. Prior to the vote you will have the opportunity to speak to us in order to answer any remaining questions that you may have.
Assuming that the Shareholders vote to
dissolve the cooperative, we will be scheduling appointments
in order for you to make a loan application, if necessary. At the same time, we
will begin work on establishing the new condominium.
Back to Top
What happens if I do not redeem, and most, if not all other shareholders do?
Answer: Provided
that you continue to pay your monthly cooperative maintenance, you will have no
disruption in your quality of life in the building that you enjoy today. Those
who do redeem will simply own condos outright rather than shares in a
cooperative of corporation that owns individual condominium units, which will be
occupied under your existing proprietary lease.
Back to Top
What happens if I don’t want to convert?
Answer: If the required number of Shareholders of the cooperative vote in favor of dissolution, the Board will proceed with the dissolution. At the time of conversion, each shareholder will exchange his or her shares in the cooperative corporation for a deed to its former apartment now a Condominium unit. The condominium unit will be encumbered by the owner’s corresponding pro rata share of the underlying blanket mortgage, if not paid off in cash.
A failure to satisfy the debt and costs, through a pay-off
or a financing, will cause the Shareholder to be in default under the bylaws and
proprietary lease and allow the cooperative to exercise all rights available.
Under the terms set out above, not participating will not excuse you from your
financial obligations to the cooperative or to the condominium association under
the replacement mortgage encumbering your unit. If you fail to make any of the
required monthly payments, you will be subject to legal remedies of the
cooperative and condominium association, including possible foreclosure on your
unit. After a short period of time, to be determined by your Board of Directors
(but usually no more than 2 years), your proprietary lease will be
terminated, your stock will be canceled, and the holder of your replacement
mortgage may foreclose.
Back to Top
Why would I want to convert to a condominium?
Answer:
In general, the value and marketability of a condominium unit is greater than that
of a cooperative. Shareholders will "own" their condominium units.
Condominium units are easily transferred and financing is generally more
available. Increased transferability makes units more marketable, and thus more
valuable. Public understanding of condominiums and the availability of financing
makes condominiums a better choice in many real estate markets. Your property
values are anticipated to rise and it is expected that your property will be
more marketable as a condominium unit than as a cooperative apartment. The value
of your real estate will rise reflecting the increased value of your unit.
Back to Top
After I convert, what am I responsible for and what are my rights?
Answer: Once you become a condominium unit owner, unlike a cooperative shareholder you will not be responsible for any portion of the tax deficiencies created by non-payment of maintenance fees by your fellow shareholders. As a cooperative owner you are and have been in the past contributing to the cooperative's losses resulting from non-payment of maintenance fees and abandonment by shareholders particularly with respect to the mortgage payments and real estate taxes. As condominium owners, everyone will be responsible for their own real estate taxes and mortgage payments. However, maintenance fees will be collected under a common form of ownership, which will require that all unit owners make their monthly payments to the condominium to ensure that all cash requirements are met on a timely basis. Fortunately unpaid maintenance fees are an immediate lien on the title and deed of the unit and therefore and in most cases is recoverable through legal action or at subsequent closing of the condominium unit.
Your rights as a condominium owner will be very similar to
those of a cooperative owner, however, they will be slightly enhanced with less
restrictions on renting your unit, on the ability to finance any portion of your
ownership and to conduct your own real estate tax appeals independent of your
fellow unit owners. However there may be valid reasons to combine such efforts
due to the economies of scale and the strength in unity by all condominium
owners in pursuing a common goal.
Back to Top
Click here to Contact Us any time with questions concerning your conversion.