Question

Co-ops are often subject to a ______________ which is a fee imposed by the co-op board for the transfer of ownership during the sale of the unit.

Answer 1

Co-ops may charge a flip tax, which is a fee for transferring ownership during a sale, used to support the co-op's finances.

Step-by-step explanation:

Co-ops are often subject to a flip tax, which is a fee imposed by the co-op board for the transfer of ownership during the sale of a unit. This fee is typically a percentage of the sale price or a fixed fee per share associated with the unit. It is meant to be a source of revenue for the co-op's operating budget and to discourage short-term speculation. The flip tax helps fund the co-op's reserves, contributes to building improvements, or pays down debt. Prospective buyers and sellers should always enquire about the flip tax policy in a co-op, as it can vary significantly between different cooperatives.