Cooperatives vs. Condominiums

Many first time home buyers, or even seasoned home buyers for that matter do not realize that there is a difference between purchasing a condominium (“condo”) and purchasing a cooperative (“coop”).  While listing all the differences and nuances could take quite a bit of time as well as a lot more detail, for purposes of a brevity, we would just list a few things in general that you should be aware of:

  1. Ownership – When you purchase a condominium you are actually purchasing the unit (aka real estate).  The differs from when you are purchasing a coop as in such a case you are purchasing shares in the corporation (association) that either owns or leases the property the unit is located in; so in essence you are not purchasing real estate;
  2. Approval – In almost all coop purchases the potential purchaser needs to obtain the coop board’s approval. The requirements for approval can vary (e.g., some boards only allow cash purchases, other boards require that you have three (3xs) times the sum of the purchase price in liquid assets, etc).  While a condo purchase may be subject to board approval, there are many cases where no board approval is necessary;
  3. Maintenance Fees – More often than not the maintenance fee for a coop is higher than that of a condo. Part of the reason why, is everything including in the coop maintenance fee (e.g., real estate taxes), whereas in a condo, the unit owner (or their lender) generally pay the taxes to the municipality on his/her own.  This is also a reason why certain portions of the coop maintenance fees are tax deductible as opposed to the maintenance fees for condos; and
  4. Mortgages – When getting a loan on a condo a mortgage is placed on the unit. This differs from a coop, where the mortgage (or security interest) is placed on the shares.  Additionally, the lender in a coop mortgage will generally require a recognition agreement from the coop association, where there same is not required for a condo.

Again, the above is just a brief description of some of the differences between condos and coops.  For more information you should consult with a real estate attorney.

The information in this blog posting is for general information purposes only. Nothing in this blog or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information in this blog is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.


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