Converting co-ops into condominiums
With the ever-changing real estate market, many people have changed their minds about whether they want to own a co-op or a condominium. Increasingly, owners are deciding not to sell their properties, but rather to go through the process of converting their co-op into a condominium. Although it can be challenging, this process is not impossible, especially with the counsel of an experienced real estate lawyer. If you are considering converting your co-op into a condominium, keep the following in mind.
If the co-op has appreciated in value over the years, there may be tax ramifications for every resident in the building if the property is converted into a condominium. Depending on the value of the co-op, there can be a substantial tax bill upon conversion.
Other financial implications
If a co-op property has an outstanding mortgage balance, this must be paid in full before the property can be converted into a condominium. This means that every shareholder in the property must be willing to pay off the mortgage before the conversion can take place. This can be costly – especially if the mortgage lender has a large prepayment penalty in its contract.
Loss of control
Being in a co-op comes with a number of advantages, such as the ability to choose who lives there and what rules the residents need to abide by. If someone on the property does not follow the rules, there is a clear course of action on how to deal with the problem. In addition, people who live in co-ops often like having a community of people to share the burden of problems that may arise in the building, such as when things break down and need repair. Some residents may not be willing to give up the peace of mind that comes with being in a co-op.
During the process of converting a co-op into a condominium, a new set of bylaws and rules must be written in order to replace the old ones. This can be time consuming and complicated, but that is not always the case.
Get help with real estate matters
Many of these concerns can be alleviated if the conversion process is overseen by a knowledgeable real estate lawyer. If you need legal assistance with converting a co-op into a condominium, or with other matters related to real estate, contact an attorney to get the guidance that you need. Real estate issues can be extremely complicated, so having a lawyer by your side when making these important decisions help protect yourself and your property.