Senior Cooperatives, are they right for you?

Are you thinking about downsizing? Where will you move?  Many of our clients consider senior cooperatives. Minnesota has more cooperatives than anyone in the state. You’ll continue to have more and more choices with new building being built everyday!

Senior cooperatives, the secret of senior housing options

Do you want to purchase your next home instead of rent? You’ll likely be working with a real estate agent. Your real estate agent will rely primarily on the multiple-listing service to help you search for your new home. The multiple listing service is THE most comprehensive resource available to search for homes. There’s just one problem. Most senior cooperatives are not listed on the multiple listing service. This means your agent (and you) won’t even be aware of them. Senior cooperatives may be one of the best kept secrets in senior housing.  Ironic since Minnesota has more cooperatives than anywhere else in the country.

Don’t buy a senior cooperative because…..

When it comes to real estate, EVERYONE is an expert. Mention to someone that there is a real estate transaction in your near future, you are sure to get all sorts of unsolicited advice. Be wary of the pundits-especially the ones that spout generalizations such as  “All cooperatives are a bad idea”.  Someone with a good understanding of cooperatives knows you can’t make generalizations about cooperatives any more than any other kind of housing. I certainly can’t say “all two stories are poorly built,” or “all townhomes have ugly paint.”  In my humble opinion, cooperatives are the least understood, least known-about senior housing option available. Talking with my clients who have moved into them, they can’t imagine living anywhere else.

The language of senior cooperatives

  • When you purchase a cooperative, you actually purchase a share. The purchase of that share gives you occupancy rights to a particular unit in the building. Once you purchase a share you become a member.
  • Because you are purchasing a share mortgages are not used for the purchase.  There are a few financing options available. However those options aren’t going to be at your local bank. Often, buyers use the equity from their previous home to purchase the share.
  • Instead of writing up a purchase agreement, you write up a subscription agreement.
  • In a condominium you pay monthly association dues, in cooperatives they are often referred to as carrying charges.
  • There may be a master mortgage on the building, for which each member pays a portion of the principal and interest in their monthly fees.
  • The membership elects the board of directors. That board of directors may hire a management company to run the day to day operations of the building. The association may be self directed or self-managed which means they are doing the work themselves.

The Process of Purchasing a senior cooperative

  • Most senior cooperatives are for 55+ owners. Some cooperatives allow rentals of the units. Some cooperatives allow a certain percentage of occupants in the building to be under 55 years old. The rules of each particular cooperative are governed by their by-laws. The membership of the cooperative can amend the bylaws.
  • When you purchase a share you are given a 10 day right of rescission. This means you can cancel during your 10 day review of all the documents (by-laws, rules and regulations and financial statements) you receive from the cooperative.
  • Before you can purchase your share, there is an application process and a background check.

What is a senior cooperative?

A cooperative is a multi-unit building, much like a condominium. However, unlike a condominium, each resident has an interest in the entire building. When a resident purchase a share and becomes a share holder, he/she has the right to occupy a particular unit in the building. If you own a condominium, you own the unit itself. With a cooperative, you own a share of the building, but don’t own the unit itself. You own piece of all the common spaces, and even a piece of all your neighbors’ units.

Why consider a senior cooperative?

This is usually when my clients scrunch up their nose at me and ask the question, “Lisa, why on earth would I purchase something like a cooperative when I don’t actually own the unit I live in?” “Why wouldn’t I just go rent an apartment?” I know it sounds wonky to not own the unit. The upside of cooperatives is they offer the most maintenance free lifestyle available. Cooperatives also offer some of the same benefits of ownership such as tax deductions. Because you don’t own the unit or the appliances, it is often the cooperatives’ responsibility to fix the appliances if they stop working. No more appliance repair people to deal with! Many cooperatives follow a maintenance schedules to replace carpet in the unit periodically. 

Shop around for a senior cooperative

Most Cooperatives in Minnesota have some commonalities, but every community has it’s own heart beat. Cooperative housing communities are as different as neighborhoods with single family homes. How do you know if the building is a good fit for you? The location, amenities, finances, and personalities of the people that live there will be the determining factors. If you’re considering a condominium, you owe it to yourself to see what cooperative housing has to offer. This is where YOU scrunch up your nose and say “Lisa, where do I look?”  I would suggest,  or call us!

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