Trusts, ownership by business organizations, and what cooperative and condominium owners own

Separate the property from the owner's interest

A building's appearance does not identify its ownership form. Ask who holds title, what the purchaser receives, and who controls decisions.

Trusts and business organizations

A trust separates legal title from beneficial enjoyment. The settlor creates the trust, the trustee holds and administers trust property under the trust terms, and the beneficiary receives the benefits. The trustee acts in a fiduciary capacity, not as an unrestricted personal owner.

A corporation can own real estate in its own name. Its shareholders own stock; they do not personally own a fractional deeded interest in each corporate asset. A limited liability company can likewise hold real estate, while its members hold membership interests. A partnership can own property for its business, while partners hold partnership interests. A general partnership exposes general partners to personal liability for partnership obligations; limited partnerships distinguish general partners from limited partners. Corporate shareholders and limited liability company members generally have limited liability, but a personal guarantee can create personal responsibility. Review the governing documents and signing authority for the particular transaction.

Cooperative and condominium ownership

A cooperative housing corporation owns the building or its leasehold. The cooperative purchaser acquires shares in that corporation and a proprietary lease giving occupancy rights to a particular apartment. The purchaser does not receive a deed to the apartment.

A condominium purchaser acquires title to a unit and an undivided interest in the common elements. New York Real Property Law section 339-h gives each unit owner exclusive ownership and possession of the unit. Shared management does not turn condominium ownership into corporate stock ownership.

Documents and shared expenses

In New York, the condominium declaration submits property to the Condominium Act. The bylaws address the board of managers, operations, and common charges. Under section 339-m, common expenses generally follow the owners' respective common interests, with authorized special allocations. Equal numbers of units do not necessarily mean equal charges.

For offerings covered by New York General Business Law section 352-e, offering literature must use the offering statement or statements filed with the Department of Law. Do not confuse an offering statement with the deed or proprietary lease that identifies the purchaser's ownership rights.