Certified Residential Appraiser Practice Exam

What kind of ownership structure requires unit owners to pay maintenance based on their proportion of total stock owned?

1. Cooperative

2. General Partnership

3. Fee Timesharing

4. Planned Unit Development (PUD)

The correct answer is: Cooperative

The correct answer highlights the cooperative ownership structure, where ownership is typically represented by shares of stock in a corporation that owns the entire property. In a cooperative, each unit owner purchases shares that correspond to their individual unit and also gives them a right to occupy that unit. The costs associated with maintaining the property—such as utilities, management fees, and upkeep—are then allocated among the owners based on the number of shares each owner holds. Therefore, the maintenance fees are proportionate to the total stock owned by the individual, reflecting their ownership stake in the cooperative. In contrast, other ownership structures mentioned do not operate on this basis. A general partnership involves shared ownership but typically doesn't allocate costs based on stock ownership. Fee timesharing is a model where participants purchase rights to use the property for specific times rather than shares, and maintenance costs are determined differently. A Planned Unit Development (PUD) is a form of ownership where individuals own their units and also pay fees for shared amenities or common areas, but this does not involve stock ownership or proportionate payment based on ownership of shares.