The master policy provided by your condo/co-op board covers the common areas you share with others in your building such as the roof, basement, elevator, boiler and walkways for both liability and property damage. If the roof of your condo gets damaged, for example, and water leaks into your unit, the master policy would cover the roof repair but not the individual repairs to your unit for damage to things like the ceiling, walls, carpets or furniture. In addition to property damage, the master policy will have liability insurance for common spaces, such as lobbies, hallways and sidewalks.
As the unit owner, however, you will need to purchase a personal home insurance policy (type HO-6). The building's master policy does not protect your personal belongings or offer liability coverage for occurrences within your unit. Your personal insurance policy will provide coverage for damages to your unit and your possessions, and additional coverage for living expenses if you are the victim of fire, theft or other disaster covered by your policy. Your policy should also provide for liability coverage. This way, you will have coverage for accidents that occur within your unit. If someone falls and injures himself in your unit, your policy would provide the liability coverage, not the building's master policy.
To adequately insure your unit, it is important to know which structural parts of your unit are covered by the master policy and which are not. You can do this by reading your association's bylaws and/or proprietary lease. If you have questions, talk to your condo association, management company, insurance broker or real estate attorney.
Be aware of the deductible on your building's master policy. If there is damage to the common spaces, every unit owner will be required to contribute money to reach the deductible. If the policy actually covers some damages that are specific to your unit, you will have to reach that deductible yourself. As a unit owner, you would want your personal policy to cover the difference between your individual policy deductible and the master policy's deductible, if you are required to use the building's insurance for something like a burst pipe.
Finally, make sure your policy has coverage for unit assessments. Unit assessments are fees charged to unit owners to pay for repairs to common areas or property. If your building is damaged by an insured disaster, and the cost of that damage is not fully covered by the master policy, this type of coverage would pay for your share of an assessment charged to all unit owners.
Anyone who has been in the market to purchase either a condo or co-op is acutely aware that it is easier to buy or sell a condominium than a co-op because transferring ownership of a co-op almost always requires the consent of building's board, while the transfer of a condo usually does not.
Since a co-op is not real estate, the board can control who lives in the building by controlling who is allowed to become a shareholder and proprietary leaseholder. So long as the co-op board does not violate laws against discrimination, it is free to grant or withhold its consent to the sale "for any reason or no reason at all."
A condo, however, is considered to be real estate. Under centuries-old English common law, it is not permissible to impose an "absolute restraint on alienation" when transferring ownership of real estate to someone else. In other words, if the governing documents (bylaws) that create a condo allow the board to prohibit a unit owner from selling his or her apartment, that prohibition would most likely be considered an impermissible restraint on alienation.
However, virtually all condo boards can exert some measure of control over who becomes an owner in the building, through what is known as the board's "right of first refusal". A right of first refusal basically means that the condominium association itself has the right to become the purchaser of the apartments being sold in the building.
Most condo governing documents give the board a right of first refusal when a condo unit is being sold and the ability to halt an impending sale by buying the apartment from its current owner. The rationale for exercise of a right of first refusal by a condominium board of managers, as with a co-op board, is to secure a community of friendly, qualified and congenial condo owners while protecting the value of their apartments.
The board must elect whether to exercise its right within a specified time period set forth in the bylaws (usually 30 days). In the event the board fails to accept the offer within the designated time, in other words, decides not to block the sale, it will issue a waiver of its right of first refusal and the unit owner is free to consummate the sale.
The board's right of first refusal usually does not apply to a conveyance by (a) a unit owner to adult family members, or a trust for their benefit, (b) the sponsor (with respect to unsold units), (c) the board or (d) parties in title as a result of a foreclosure.