Humber/Ontario Real Estate Course 4 Exam Practice

If Buyer Davis wants to buy in an equity co-op, what must occur?

1. Buyer Davis must seek approval from the board of directors before completing a purchase

2. Buyer Davis only needs to sign an agreement of purchase and sale

3. Buyer Davis is individually liable for the unit's mortgage but not for the building’s mortgage

4. Buyer Davis will address property taxes separately from monthly charges

5. The purchase can proceed without board consent if conditions are clear

6. Buyer Davis must enter into an occupancy agreement post-purchase

The correct answer is: Buyer Davis must seek approval from the board of directors before completing a purchase

In an equity co-op, the transaction is quite different from typical real estate purchases because of the ownership structure. Buyer Davis must seek approval from the board of directors before completing a purchase. This requirement exists because co-ops are often structured as a corporation where members do not directly own their apartments but rather share ownership in the corporation itself, which owns the entire property. The board of directors plays a significant role in maintaining the community’s standards and financial health, and they typically evaluate prospective buyers to ensure they will be a good fit for the co-op culture. The approval process may involve background checks, interviews, or financial scrutiny to determine whether the buyer can meet the financial obligations associated with owning shares of the cooperative. Thus, board approval is a fundamental part of purchasing an equity co-op.