Flip-Tax : Possible Income Generator for Condominiums
Recent New Jersey and New York court decisions have made the "flip-tax" (closing-related fee tied to the purchase price of the condominium unit) a possible avenue of income generation for condominiums. Condominiums should consider amending their bylaws to empower their boards to adopt, or to create it without board effort, policies which require the purchaser of a unit within that condominium to pay a "membership fee", or "capital contribution fee" or "privileges fee" equal to a specific percentage of the purchase price. Currently, most condominiums generate such fees, but base them on a flat rate unrelated to the purchase price, or a rate tied to the then current monthly fee. A fee tied to the purchase price allows that condominium to benefit from the strong real estate market and ever-increasing purchase prices. It is important however that this right and/or power be set forth specifically in the condominium's bylaws
