What should I buy? Houses, Coops, Condos, Oh My!

You have finally made the decision to buy real estate. You are over making monthly payments to a landlord and want to see your monies directed toward a solid investment. You begin to scour the real estate internet sites, and begin to narrow down your search options. You know how many bathrooms you want. You know how many bedrooms you are looking for and that you want an updated kitchen. But do you know what kind of property you want? Condominium, Cooperative, Single Family Home… what does all this mean? The various types of properties provides for different types of ownership and different obligations. Before you make the calls to your real estate agent, perhaps you should quickly review these ownership rights and obligations. 

Single Family Residence: 

Let’s start off simple, shall we? Fee Simple, that is. A single family residential home is one in which the homeowner owns the entire property directly. You purchase a lot on a block with a home upon the land. You are responsible for the maintenance of the entire premises, the lawn/landscaping surrounding it, driveway and pathways. This will mean that if something breaks in your home, all maintenance costs and obligations are borne by you. This is home ownership in its simplest form. Therefore, be prepared after closing to get a frequent customer card at Home Depot or subscription to Angie’s List. All maintenance will be your obligation. 

With this heavy responsibility comes some freedoms. Notwithstanding any township, city or borough laws and ordinances to the contrary, you are free to do with your property what you wish. Should you feel the need to maintain Christmas lights on your home in July, or park a non-working car in your driveway indefinitely, this is your right as a homeowner. However, if you wish to make new friends in your neighborhood, you may not want to pursue these options. 

Townhome/Condominium/Planned Unit Development:

This is where things begin to get a touch complicated. When you purchase within a condominium, town home or planned unit development, you are purchasing a specific unit within the development along with a percentage of common interests within the entire community. The common interests is dependent on the specific community and what is written in the community’s Public Offering Statement and Governing Documents. Depending on the specific community, common interests could include a pool, a clubhouse and other amenities. It may also include any parking spaces, landscaping and/or roofs. While the community association will be responsible for the maintenance and replacement of the common interest items, the unit owner will be obligated to maintain, repair and replace all items within the unit boundaries. These distinctions are different for each community and are properly delineated in the Master Deed of the community. In order for the community association to maintain these common elements, the Association will charge each unit owner a maintenance fee to be paid monthly, quarterly or annually. These financial obligations are obligatory upon receipt of your unit deed upon purchase. In the event that the unit owner does not pay these fees, liens and lawsuits can be brought against a unit owner. This extra financial obligation, however, can give you some relief as a first time homebuyer. Perhaps you are not used to conducting your own snow removal, or mowing your own lawn. Purchasing under this type of ownership might be a way to transition from a rental where most maintenance obligations belong to the Landlord. 

Keep in mind, that in addition to maintenance fee obligations, community associations also impose rules and regulations that may prohibit certain usages of the property. For example, remember those July Christmas lights? Well those most likely will be against Association rules and will need to be taken down well within a month of the end of Christmas season. Failure to abide by this rules as well as many others can result in fines. These rules differ from association to association and as a prudent owner, you should be familiar with them. 


Although not as popular in New Jersey, cooperatives are another form of ownership. In purchasing a cooperative, the buyer purchases shares in a real estate corporation. The amount of shares is based upon the type of apartment within the coop. There is no deed transfer from the previous owners but rather a stock certificate is purchased. It is not recorded in the county clerk’s office. In addition to a stock certificate, the owner becomes a tenant of the coop and has a lease term of 99 years through a document known as a proprietary lease agreement. Like a condominium, the shareholder is financially responsible for a maintenance fee to be paid to the cooperative in exchange for the maintenance obligations. Failure to pay such fees can result in eviction pursuant to the proprietary lease agreement and the governing documents of the corporation. In addition, cooperatives also have rules and regulations that must be minded. Failure to do so can also result in fines. 

One major difference is that the proposed buyers must be approved by the coop board. Most, if not all, purchase contracts will be conditioned upon the coop board approval of the prospective purchasers. An application will be submitted to the board providing for the financial, personal and career backgrounds of the buyers. 

As you can see, various forms of ownership provide for different responsibilities, obligations and benefits. Prior to your purchase you should make sure that you are familiar with the specific ones involved in the property you are interested in and consult with your attorney accordingly.