Humber/Ontario Real Estate Course 3 Exam Practice

Which statement is correct if Buyer LeBlanc decides to purchase an equity co-op unit?

1. Buyer LeBlanc must be approved by the board of directors before a sale can be completed.

2. Buyer LeBlanc does not need an occupancy agreement, only an agreement of purchase and sale.

3. Buyer LeBlanc is only responsible for the mortgage on her unit.

4. Buyer LeBlanc will pay property taxes separately from monthly charges.

5. Buyer LeBlanc needs board approval only after one year of residency.

6. Buyer LeBlanc must obtain a special occupancy certification.

The correct answer is: Buyer LeBlanc must be approved by the board of directors before a sale can be completed.

When a buyer decides to purchase an equity co-op unit, it is essential to understand the unique structure and requirements associated with such properties. In equity cooperatives, the ownership model is based on shares in a corporation that owns the entire property, rather than on traditional real property ownership. The correct statement emphasizes that Buyer LeBlanc must be approved by the board of directors before completing the sale. This is a fundamental requirement in equity co-ops because the board has the authority to maintain certain standards and regulations within the cooperative community. Approval from the board ensures that the new buyer meets the financial and character standards set by the organization, which can include factors like creditworthiness and compatibility with existing residents. If the board approves the buyer, it also signifies that they believe the new acquisition will not adversely affect the community or the co-op's financial health. In contrast, board approval does not happen after a year of residency, as there is typically a need for prior approval to ensure compatibility upon the initial transaction. Additionally, the structure of co-ops means residents are responsible for more than just their mortgage; they often pay a monthly maintenance fee that covers property taxes, utilities, and other communal expenses, thereby making separate tax payments less common. Lastly, concepts like occupancy