When we think of Co-operative apartments, we think of New York’s upper east side. Posh, elegant, spacious, well staffed, well screened dwellers choosing those whom they feel will fork over the hefty price tag and the still more hefty monthy maintenance fee. Well, co-ops are not exclusive to Manhattan! A kinder and gentler sister version is alive and thriving in Chicago – AND like their NYC relatives, they are also posh, elegant and usually very spacious!
What is a co-op? Simply put, a way of holding title in which the “owner” is a member of a corporation that holds the real property (real estate) interest. Owners are therefore referred to as “shareholders”.
Chicago co-ops usually feature relatively low price tag. The sticker shock can come in the monthly fees. Before you go running away however, ask what is included in the monthly fee amount. Usually the big ticket item in the assessment is the inclusion of property taxes. Always ask your Realtor if property taxes are included in the monthly fee reflected on the listing sheet. Since it is a corporation, there is 1 tax bill. Each shareholder has a deductable amount for tax time.
Other items included in the monthly fee may be heat, door staff, parking, and even electricity (purchased in a bundle by the corporation and then each shareholder is charged according to usage)
Generally be prepared for a higher downpayment. Many Lakeview and South shore Co-operatives allow financing of shares but will require at least a 20% – 25% downpayment. Many Gold Coast co-operatives do not allow financing and in addition, you must have a large amount in liquid assets to be voted into the corporation.
For financing, ask a Realtor that specializes in Co-ops to recommend a lender to you. Many brokers and banks do not lend for this type of ownership.
Lastly, be prepared for a through screening of your assets. Since it is a corporation, the shareholders do not want to have to assume responsibiltiy of another shareholders shares should he or she become unable to meet the fees associated. A simple credit report will not suffice. The most common reporting company used in Chicago is Thomas Reports. Be prepared for a through check of your credit, a full character report which includes personal profile, verification of residency and occupation along with income and assets such as real estate, investments, bank accounts, etc. You will also need business references from people such as attorneys, accountants, bankers, or stock-brokers, educational background, and professional and social affiliations. Last but not least, a criminal background check may be performed. Your Realtor can help you with this process.
Co-operative apartments are the quiet gems in Chicago real estate for many purchasers. Provided you are aware of the legal description of a co-op and are prepared to be a shareholder, purchasing in a co-op is a great choice.
Some co-ops to consider:
Gold Coast – 229 E. Lake Shore Drive
Lakeview – 442 W. Wellington
Near North – 3750 N. Lake Shore Drive