“Co-op v. Condo” What’s the difference?

Simply put, the traditional housing “co-op” involves the formation of a corporation for the purpose of acquiring title to a multi-unit building and, in turn, leasing individual units (apartments) to the shareholders of the corporation; whereas condominium ownership involves acquiring title to individual apartments or units. In fact, condominium ownership is, for most practical purposes, only one form of cooperative housing and, like the “co-op”, must include provisions for management and maintenance of the building(s) and “common” areas, usually dictated by an elected Board of Managers, in the case of a condominium, and a Board of Directors in the case of a “co-op”.
The “condo” advantage of individual unit ownership can be compared to the benefit of being able to “choose” your neighbors in a “co-op” setting, where the application process is very often quite selective. In the sale of a “condo”, once a price is agreed upon, the deal is done; whereas the “sale” of a “co-op” requires approval by the Board of Directors—which can be (and often is) withheld based upon arbitrary selection criteria—with no recourse to the buyer or seller if the “sale” is not approved.
“Co-op” ownership represents an “interest” (i.e. stock) in realty; “condo” ownership is actual ownership of realty. Price differences reflect demographic and geographic distinctions. You decide what’s best for you.

HI Viviane,

I recently wrote a blog post that attempts to explain everything a consumer might want to know about coops. I invite you to take a look via the link below.

Best of Luck,

Jenny

Also left out is Coops have a tax deductibility factor typically most in the 45-65% range, this represents the portion of the Miant that is Real Estate taxes and the underlying mortgage interest. I can easily give you dozens of Condos with highter CC/Taxes than Coops Mint. Maint and CC (Common Charges) are a function of a number of things. Building service levels and amenities divided by the apartments, A condo with 46 units and a full time DM staff and Full TIme Super will have very high CCs, it does not cost any more or less to pay a DM if there are 46 units or 146...and until a building has over 200 or so units you usually will find only 1 Door staff on at a time. Pools are expensive, older buildings require more upkeep. So it is not so cut and dry.
One thing someone said was completely and totally wrong. CondOps....a CondOp has absolutely nothing to do with your freedom to rent with no board approval, sell with no board appproval, how long you can rent/sublet...NONE of that. This term is highly abused by agens who have no idea what they are talking about. A CondOp is a form of project...it means that the building contains a number of condos, yes a CondOp is a Condo in legal form. Typically these are mixed use developments. The CondOp may have say 4 units, Units 1-3 are the retail spaces (Or Office Etc) and Unit 4 is the residential component of the development/building. That unit is owned cooperatively and each unit in it is a coop. Some of the most restrictive Coops in the city are actually part of CondOps.
Agents use the term incorrectly when they call a "loose coop" with condo-like rules a CondOp. Rules can change. Sponsors converted as CondOps to seperate the retail spaces even more from the Coop Boards control--IE if the Coop decides to renovate their lobby it will not effect the retail condos. A true CondOp will have two sets of financials, the Coops and the Condominiums. 200 W 20th is a CondOp, so is 161 W 16th. 520 W 23rd often called a CondOp is not one, it is a land lease Coop with loose renting rules.

Here is an artical that talks about one Cond-Op and mentions the legal description.

http://www.habitatmag.com/index.php/habitat/publication_cont…

Viviane,
Your are right that condos in NYC are higher in purchase price than co-ops. You are also right that your maintenance on co-ops tend to be higher than your monthly charges (common charges plus real estate taxes) on condos. This is because maintenance consists of real estate taxes, upkeep of the building and the underlying mortgage. On a condo you are paying just the first two. In new construction, which will be condo, you may have a tax abatement.
There are several things to consider. One is if you have any plans to rent it out in the future. Co-ops have rules about this, so if you are anticipating needing to rent it out, condos suit you better. Then there is the issue of downpayment. Co-ops have a minimum of 20%, commonly 25% down. Condos usually require 10% down, though these days it is extremely difficult to get a 90% loan. But downpayment is a factor. Then there is the issue of meeting a co-op board's requirements. They will look at things like your debt to income ratio, and may be stricter than a bank, and also how much you will have left in liquid assets (usually 1 1/2 to 2 years of mortgage and maintenance payments). These are all factors to consider before you look.

Jenet Levy
Halstead Property, LLC
jlevy@halstead.com
(212) 381-4268

1- in a condo you own real estate. 2- in a coop you own shares, there is a big difference. Dear home buyer u need to educate your self before proceeding. Expensive/cost is a relative term. The question is what am i going to purchase and for what immediate and future purposes. This is, the equation that u need to answer. Good luck in your hunting.

Something has been left out of the other answers that is critical to your question. The maintenance in a coop includes the real estate taxes. When you pay maintenance in a condo, the real estate taxes are additional. When you factor the taxes in to the monthly condo charge, you may find that the difference is not quite as great. Remember also, that the interest on the underlying mortgage, if there is one, is also tax deductible. Another important point, if the co op has to raise money for renovations, they can refinance an existing underlying mortgage, or, if one does not exist, raise money that way. Since all condo units are owned "singly and separately", it is much more difficult to raise funds for repairs and renovations except through the process of assessments. That means that you might suddenly get a letter from your condo board that they are assessing you tens of thousands of dollars which have to be paid by a specific date. I am a real estate educator and have been in the business for over 35 years and the best advice I can give you is this. Find a place you want to live and then let your accountant and lawyer look over the financial and legal documents and then decide whether or not to "go for it". Don't buy something because of its legal structure, but it because you love it. By the way, I live in a co op and love the house rules so that I am not living among a bunch of renters who don't care about the building as much as I do and I don't have a lot of barking dogs to contend with.
Dianne Stromfeld
Education Director
Realty Institute
realtyinstitute@aol.com
718-275-0003

Good morning, Vivian.

In addition to what others have noted, there are additional fees and taxes associated with the purchase of a condo including even higher possible closing costs for new construction. Here’s a link for an extensive list of closing costs for co-ops and condos: http://bit.ly/16s9xF

But there is a 3rd option: Buying a condop. Simply put a condop is a cross between a coop and a condo. Although legally it is a co-op most condops do not require board approval, have lower closing costs than condos and allow flexibility to sublet or use property as a pied a terre. More details on the differences between co-ops, condos and condops can be found here: http://bit.ly/1JskCI

Remember in today’s economic climate not only will you need approval for your mortgage (and board approval for you in a co-op) but the building will also be scrutinized by the lender. For example in condo new construction a lender may require that 70% of all units be sold before giving you a mortgage.

As always, before purchasing real estate in Manhattan, I suggest putting together a team including a buyer’s broker, a mortgage broker/bank/lender and an attorney specializing in sales of residential properties in NYC.

Bob

Many new condo developments have tax abatements for 10 years. Some new condos in Harlem have tax abatements for 25 years. Most coops have an underlying mortgage. Condos do not have an underlying mortgage on the building. The portion a share holder pays toward interest on the underlying mortgage in a coop is tax deductible. Most pre-war apartments are coops that converted from rental buildings.

Both type of ownership has pros and cons.

Viviane,

Both have different by laws and OWNERSHIP..before making a decision get a look at both so this way you know exactly what you're paying for.

Good luck to you

And always remember.....you get what you pay for!