Cooperative and Condominium Conversion - A Primer
Right now in New York and Northern New Jersey, there is a trend of cooperative buildings converting to condominiums. A Cooperative, or co-op is a combination of corporate ownership of shares of stock and a residential leasehold interest in real property. The corporation owns the land and the building which is a residential apartment house. Shares of the corporation's stock are sold in blocks to individuals. Each block of shares is allocated to a particular apartment in the building. By purchasing the block of shares allocated, the owner of the stock becomes entitled to a lease, known as a "proprietary lease", for the apartment to which such shares are allocated.
When a co-op building is converted to condominium ownership, the purchase buys an apartment. At the same time, the purchase, together with the other unit owners, buy an "undivided interest" in the common elements of the building. An owner of a condominium owns the actual unit.
Depending on the area of New York in which the building is located, different laws apply related to the conversion of co-ops and condominiums. Basic provisions include the Martin Act (PDF) which applies to the sale of all types of cooperatively owned real estate including sale of co-op shares, condo units and interests in homeowner associations. The Cooperative and Condo Conversion Act, also part of New York State's General Business law, regulates the conversion of existing rental buildings to cooperative forms of ownership. These laws provide specific protection for tenants living in buildings undergoing conversion, and require that offering plans include explanations of the rights and obligations of purchasers and non-purchases.
Where can I find the wording of the proposed new Homeowners Association Law?
Hello Robert -
I received your comment posted on the Blog concerning the new proposed Homeowner Association Law.
The law that you are referring to is UCIOA, The Uniform Common Interest Ownership Act. It is applicable to New Jersey's common interest communities and is designed to provide homeowner protections and clarify the powers of community association boards.
You can find more information concerning UCIOA at the Community Association Institute's website, www.njcai.com, click on "Legislation" on the left and then on the next screen, click on the link toward the top of the screen that says "UCIOA information packet". This should provide you with the information that you are seeking.
Hope this helps. Have a good day.
Robyn Nolan Howlett, Esq.
Stark & Stark, A Professional Corporation
P.O. Box 5315
Princeton, New Jersey 08543
phone: 609.896.9060
fax: 609.896.0629
I am in the process of purchasing a 6fam in Jersey City NJ and would like to convert to condos. The only problem is that two of the tenants are stubborn and are giving the seller a hard time. Should I buy the property with the tenants? If i sell the other 4 units, I still make a little profit.
Mel, Curious how your situation turned out... also would like to get a reference for what's involved in purchasing an apartment building and then turning it into a condo.