CurrentEvent Article on Real Estate
TheNew York Times: Rising Costs a Concern for Land-Lease Building owners
Thearticle talks about the rising cost of financing condominiums.Land-leasers in New York are concerned about the ever-increasingprice of leasing space to erect condominiums.Marc Cooper, thechairman of a private company, bought apartment at the Trump Plaza.The land on which the apartments are was on lease meaning that thebuilding did not own the land but paid rent to the owner. The mainissue in the article is that the cost of financing the condominiumsis set to rise in future hence, negatively affecting the value ofthe apartments. The high rental payments paid to the land owner willalso continuously increase the carrying charge of the condominiums.
Asthe text book states, the first step in creating a condominium is forthe state to pass laws that create the legal framework forcondominium ownership. The laws are already enacted in New York. Infact all states have passed the laws and they are variously referredto as the horizontal property act, strata titles act, the condominiumact, or a similar name. Most of these laws follow the FHA model inaddition to the particular refinements of each state(Jacobus 419).The distinguishing features of a condominium are its separate andcommon elements and its system of self-government. The separateelements, called separate, are those areas in the condominium thatare exclusively owned and used by the individual condominium owners(502). Because each condominium can be separately owned, each can beseparately financed, similar to single family-residential detachedproperty. Thus, purchasers can choose whether or not to borrowagainst the unit. If they borrow, they can choose a large or smalldown payment and a long or short amortization period.
Jacobus,Charles J. Realestate: an introduction to the profession.Cengage Learning, 2003.