Boston Beacon Hill condos versus co-ops
What’s the difference from a Boston Beacon Hill condo versus Beacon Hill co-op? In a Boston condominium, a purchaser owns the unit plus a percentage of the common areas of the building. The purchaser takes title by deed, which is recorded in the county clerk’s office. If you intend to obtain a loan to purchase the Boston condominium, you will sign a mortgage, which will be recorded in the county clerk’s office. In a condominium there is an association that you belong to once you purchase the property. The association provides services such as general maintenance to the common areas in exchange for a monthly condo fee. Because it is real property you will pay your property taxes separately or inclusive with your mortgage payments. Generally your lender will assist you in this area. Because a Boston condo is real property the closing costs are higher than those of co-ops. Whether you own a co-op, or a condo, you may have to pay assessments for any major repairs or renovations.
Pros for buying a Beacon Hill condo
- Easier approval process
- Own actual real estate giving you more rights to it, i.e. you can transfer deed to family members
- More control over building maintenance and development issues
- Lower monthly common charges
Cons for buying a Beacon Hill condo
- Typically higher purchasing price on per sq. ft. basis
- More legal responsibilities for the entire living facility
Boston Co-ops and Boston condos may seem similar at first glance, but there are some fundamental differences. A cooperative–or co-op association–is a legal corporation made up of shareholders that owns a residential building. Membership in the corporation is granted when you purchase a share in the cooperative by buying a unit. Rather than owning your unit the way you would a Boston condominium, you are, in a way, becoming a tenant. Property taxes are included in monthly fees, a portion of which are tax-deductible.
Members screen and select new residents via their elected representatives (the co-op board). You may be familiar with many of the better-known differences between Boston condos and co-ops: The building’s approval process, financial requirements and rules are usually more stringent in a co-op, but co-ops generally cost less to purchase.
Pros buying a Beacon Hill Co-op
- Co-ops are usually cheaper to purchase than condos.
- Co-ops have slightly lower closing costs; title insurance isn’t needed and and there is no mortgage recording tax.
- A thorough vetting process and stricter financial requirements mean more financial stability, especially in market downturns.
- The vetting process and restrictions mean more owner-occupied units and less turnover, which can prevent problems like a revolving cast of renters, illegal Airbnb use and other potential disruptions.
- A portion of monthly maintenance fees are tax deductible
Cons buying a Beacon Hill Co-op
- The approval process and building rules are usually stricter in a co-op, and potential buyers can be rejected without having to provide a reason; condo boards can’t legally reject potential buyers.
- Co-ops generally require buyers to make a down payment of at least 20 percent of the purchase price, sometimes as much as 50 percent or more; some exclusive buildings don’t allow financing at all. Co-ops also have liquid asset requirements and may ask buyers to meet a debt-to-income ratio and have an excellent credit score.
- Stricter financial requirements mean you’ll be asked to share more personal financial information.
- Limits on subletting, purchasing for others and pieds-a-terre mean co-ops are not a good choice for investment buyers who don’t plan to live in the building or who are looking for short term ownership.
- Monthly maintenance fees are generally higher for co-ops than for condos, as a share of the property tax and possibly payment toward an underlying mortgage are included.
- The purchasing process generally takes longer.
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