Condos & Co-ops

General Advice

FEB 25, 2023

A common question that new apartment buyers often ask is: What's the difference between a condo & a cooperative (co-op)? 

In a nutshell, a condo gives you actual ownership of the unit you're buying (including a % of the common areas). A co-op purchase means you're buying a number of shares in a cooperative corporation that is the building, not the actual apartment itself.

Still unclear? Keep reading.

A co-op purchase entitles you to a number of shares in the corporation that is the actual building itself. The number of shares you buy dictates the size of your apartment, and in turn you receive a proprietary lease that allows you to live in said apartment.

What Are The Differences?

Although condos are more expensive, they typically have fewer rules that owners need to follow in regards to subletting, short term renting, etc.

Co-ops are known to be anti-landlord, and thus will  have rules and regulations that prevent shareholders from renting out their apartments for too long. For example, a common co-op rule is a set limit of years that an owner is allowed to rent out their apartment.

Co-ops are generally priced lower, but have a lengthier approval process (must get approved by co-op board), down payment requirements (e.g. 20%), and monthly fees (maintenance).

Condo owners have to pay a monthly bill referred to as "common charges" which includes upkeep of the building: landscaping, common spaces, staff payment, shared utilities, etc. However, condo owners pay their own tax bills whereas a co-op resident's monthly "maintenance" cost covers her portion of the property taxes of the building.

Co-op owners are typically only writing one monthly check in "maintenance" charges and typically this fee tends to be higher due since the fee also includes a portion of the mortgage payment tied to the building.

Which Is Better?

It depends entirely on what you're wanting. Co-ops typically have stricter board rules as well as their own application process (which includes an interview) before accepting a new buyer.

If you're the kind of person that wants to be in a building that will always have familiar faces and stricter rules around subletting to stranger tenants, then a co-op purchase may be a better fit for you.

This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.


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