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September 2016

Habitat Magazine

Cooperatives and condominiums are very different animals.  Consider the handling of foreclosures.  When a co-op apartment owner fails to pay maintenance, and that owner has a loan secured by her shares, the cooperative is often protected because it has a first lien on the apartment. In practice, very often a lender will pay the maintenance (or at least portions of it) to the cooperative to preserve the asset. If the apartment is sold at a non-judicial foreclosure auction, the cooperative will receive the balance of monies due and, thereafter, the lender will be permitted to receive what is owed on the loan.
Condominiums are not so lucky.  When a condo unit-owner defaults in the payment of common charges, and also defaults in the payment of his mortgage, the condominium can seek to foreclose. But unlike a cooperative, its lien is second to what’s known as the “first mortgage of record against the premises.” 

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