There are several different forms of ownership that make up the stock of home owner’s associations in Connecticut. They are typically condominiums, cooperatives and planned communities or PUDs. While these types of ownership can not be distinguished from the physical appearance, it is the legal structure that differentiates one from the other.
The most common form of ownership is the condominium. In this fee simple form of ownership, the owner of the unit owns the unit and an undivided interest in the common elements. The owner receives a property tax bill for the individual unit. The governing documents are the declaration, bylaws and rules.
A popular form of ownership in NYC and less common in Connecticut is the cooperative. In this form of ownership, it is stock in the corporation that the individual owns and he is entitled to occupy his unit through a proprietary lease. As the individual does not own any real estate with a cooperative, they do not receive a real estate tax bill from the municipality; rather the corporation receives the real estate tax bill. This is usually the largest operating expense item in the budget of the cooperative. Prior to purchasing shares, the buyer is required to complete an application that is reviewed and vetted by the corporation’s board of directors. Many cooperatives will also have an underlining mortgage that is an obligation of the corporation and can be significant.
Another form of ownership is a planned community or planned unit development (PUD). In this type of ownership the owner typically owns the land which the unit sits and the air space above the surface of the land as well as an undivided interest in the common elements of the association. Units in this form are attached townhouse style or free standing detached units.
Each of these different types of ownership forms has their own benefits, and negatives. Financing, purchasing and selling, use of a unit and maintenance responsibilities all can vary significantly from one type to another and from association to association. It is best to thoroughly understand the property you are considering and work with professionals that can help you along the way.