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Purchasing a co-operative apartment – things to consider
Köpa bostadsrätt - Engelska
When you purchase a co-operative apartment apartment you become a member of an association that owns an entire property together. Before you decide to buy, it is essential that you inspected the apartment and investigated the a cooperative apartment association as well.
Translated page: This text has been translated from Swedish. The text and appearance of the page may look different from the original page.
Tips when buying
Arrange for a loan commitment well in advance.
You can borrow up to 85 percent of the property's value. The remainder must be financed with your own down payment. Borrowing money for the down payment as well will result in a higher interest rate since the property does not serve as collateral.
Examine the apartment carefully. Look under carpets, behind paintings, and turn on the taps and so on. If you feel uncertain, you can seek assistance from a property inspector.
Go through the annual report to check if the association's finances are stable, as this affects the monthly fee.
Purchasing a co-operative apartment does not mean you buy the apartment itself, but rather the right to live in the apartment for an indefinite period.
The co-operative apartment consists partly of a right of use and partly of a share in the co-operative housing association. Together with the other members of the association, you own the entire property.
The property includes:
the land
the buildings with the apartments
all common areas
any outdoor spaces
premises such as offices and garages.
As a member of the association, you must of course follow the statutes and rules of conduct.
When you purchase a co-operative apartment from another private party, the Sale of Goods Act applies. If you and the seller agree on something that differs from the provisions of the Sales of Goods Act, your agreement applies instead of the Sales of Goods Act.
When you are thinking about buying a co-operative apartment, it is advisable to get a loan commitment. This means that you receive a promise from a bank to lend you a certain amount of money. Even if you have a loan commitment, the bank may later deny you the loan if it finds that the assessed value of the property you want to purchase does not justify the amount of the loan you are seeking.
The loan commitment is valid for a certain period of time; the actual duration varies from bank to bank. The loan commitment is based on your income and living expenses.
Down payment for an apartment
You may borrow a maximum of 85% of the appraised value of the property. You can finance the rest with your own down payment. If you don’t have sufficient funds to pay the entire down payment with your own money, you can borrow for that as well.
Some lenders offer unsecured loans for the amount above 85% of the value of the property. Before you take out a loan for the down payment, it is important to understand the costs and risks involved. Since the property is not pledged as collateral, you will need to pay a higher interest rate. The repayment period may also be shorter compared to the first mortgage.
There is no legal requirement for a duty to investigate when purchasing a co-operative apartment. However, always inspect the apartment/property if prompted to do so by the seller or the estate agent. If you fail to inspect it, you cannot claim compensation from the seller for defects you should have discovered.
It may be wise to hire a professional property inspector to inspect the property, but you should also inspect the property yourself. Test everything to make sure everything is working properly. Turn on the taps, flush the toilet, look under carpets and behind paintings and so on.
If the seller has renovated the bathroom, it’s a good idea to find out if it was done by a contractor or the seller himself. If the seller renovated it himself, make sure that the damp-proofing moisture barriers are done properly.
When you decide to buy, you should ask the seller for a copy of the apartment register. There you can see if the co-operative apartment is mortgaged.
A mortgaged property means that the current owner has a mortgage where the property serves as collateral. It is completely normal for a property to be mortgaged. Most property owners have some form of mortgage. However, it is important to check if the property is mortgaged because the mortgage is tied to the property and not to the person selling the property.
If the property is mortgaged, the mortgage remains even if the property is sold. The seller should settle the loans before the buyer takes possession of the co-operative apartment. However, if this does not happen, and the lender demands their collateral, you as the new co-operative apartment owner may be forced to pay to keep the co-operative apartment.
Feel free to talk to the neighbours and see if they seem happy. Review the annual report to check if the association's finances are stable, as this affects the monthly fee. Also, ask the board about what is happening in the association. Major renovations or upgrades can affect the monthly cost.
Even if the bathroom in the apartment you are interested in has been renovated, a pipe replacement may be planned in the association, and then all bathrooms are usually renovated. It is not pleasant to have paid a higher price for the co-operative apartment because it was newly renovated and then see it being torn out and redone, resulting in an increased monthly fee
To be able to purchase a co-operative apartment, the board must approve you as a member of the co-operative housing association. This is in accordance with the relevant statute regarding co-operative apartments, the Housing Cooperatives Act.
If the co-operative housing association declines your application for membership, you can appeal to a regional Rent and Tenancies Tribunal. The co-operative association cannot refuse membership without having a very good cause.
If you have signed a presale agreement, the co-operative housing association cannot refuse you membership. The association must decide whether you can become a member when the presale agreement is signed. One acceptable reason for refusal may be that the the co-operative housing association is restricted to persons over a certain age. This is quite common in senior housing.
Discrimination on the grounds of ethnicity, religion or creed or any similar grounds is prohibited by law.
You are responsible for keeping the apartment in good condition. This means that you are responsible for repairing any damage that occurs in your apartment. This also applies if there is an accident.
As a co-operative apartment owner, you may make changes to the apartment, but you will need to apply for the board’s permission if you want to make a change to the apartment that involves:
an intervention in a load-bearing support structure
changing existing pipes for water, drainage, heating or gas
any other substantial change to the apartment.
As a co-operative apartment owner, you are also under the obligation:
not to sublet without the board’s consent
not to disturb your neighbours
pay the annual homeowners fee (a fee paid monthly).
The boundary for responsibility is usually at the front door
It is commonly said that the boundary for responsibility for maintenance stops at your entrance door. An exception is that the co-operative housing association is responsible for repairs to the water pipes and wastewater pipes, plumbing for heating and gas, and electrical wiring up to the unit, if the association has provided the utility lines to the apartment and they serve more than one apartment. The same applies to ventilation ducts.
You can read more about your responsibilities in the co-operative housing association’s bylaws. It also sets out the obligations that co-operative apartment owners and the co-operative housing association have to each other. You should contact the board if you have any doubts at all about what you can or cannot do.
The co-operative housing association must set aside money for maintenance
The co-operative housing association is obliged to regularly set aside funds for maintenance and repair of, for example::
facades
stairs
main pipes
drains.
But quite often the funds for external maintenance are not sufficient, so many associations take out loans for such measures.
It is not uncommon for there to be a fund for internal maintenance as well. This means that part of the annual homeowners fee is earmarked for the maintenance and repair of individual apartments. You can take money from this fund if you want to renovate your co-operative apartment.
