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F.A.Q.
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What is a "Mortgage Contingency Clause"?
This is a clause in a sales contract that say basically if you can't attain a Mortgage, your earnest money deposit (10% down payment upon signing the contract) will be returned to you. If you waive this clause in the contract, as is frequently done in a seller's market, you will lose your 10% earnest money deposit if you fail to attain a mortgage. Always get pre-approved for a mortgage to diminish your risk. |
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Why Would someone Waive a Mortgage Contingency Clause?
This is done in a seller's market, especially when there are multiple bids, to increase your chances of getting the space. You become more attractive to the seller because no matter what happens the seller will come out with something. If you get the mortgage then the sale will continue and the seller is happy and if you don't get the mortgage, the seller gets your 10% earnest money deposit and is very happy. With multiple offers, someone will inevitably waive this clause to try to give themselves a competitive advantage. The risk in this type of move is limited providing your pre-approved and know you can get a mortgage. A good idea is to develop a relationship with a solid mortgage contact. |
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What do they mean by 80/20 Rule?
The 80/20 rule says that not more than 20% of a co-op's revenues come from commercial spaces. If this is the case the maintenance is not tax deductable. |
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What is the deductable portion of the maintenance represent?
They typically represent mortgage interest and real estate taxes. |
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What is a cond-op?
By definition, a Cond-op is a residential Cooperative where the ground floor (typically commercial units) is converted into a separate "condominium" which is either owned by an outside investor or the original sponsor of the building. Thus, although the residential units are a coop, the commercial units are owned as a condominium by an entity other than the coop. Thus, the coop does not receive the benefit of the income from these units. and does not break the 80/20 rule. |
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What is an Aztec Recognition Agreement?
This a document the bank draws up to give their lien first priority ove the co-op's lien in case of the shareholder's (you) default. |
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What is a UCC-1 and UCC-3?
The UCC-1 is filed by the bank when a loan is initiated while the UCC-3 is filed after the satisfactory payment of the loan. |
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