Cooperatives & Condominiums

A relatively new topic tested in Property on the MBE is the topic of Cooperatives & Condominiums. You won't see many questions on the exam in this area but it's very likely you'll see a few. 

Understanding cooperatives requires an understanding as to how title is held in the property. In a cooperative, title to both land and buildings is held by a corporation. The corporation leases individual apartments to its shareholders. Individual owners are regarded as tenants, and direct restraints on alienation of an individual is valid. 

In a condominium, each owner owns the interior of his/her individual unit. Each owner also owns an undivided interest in the exterior and an undivided interest in common areas of the condominium. Unlike with a cooperative, the ordinary rules against restraints on alienation do apply. 

You might see some questions on homeowners' associations. These associations oversee the common areas of the condominium property, and the owner of each condominium is a member of the homeowners' association. A board will manage the property and the owners will elect the board. 

Fees are required by condominium owners (generally monthly) which is paid to the homeowners' association and used for upkeep of the property and such. The monthly fees may not be sufficient to cover the required purposes in which case a special fee or special assessment may be imposed (generally not more than 1 time per year) and each owner will be required to pay that fee. 

Homeowners' associations may pass bylaws that will place requirements/limitations on the owners' use of the property. These rules are binding and either the individual owners or the homeowners' association may enforce any bylaws that were validly passed.