Home Buying in West New York>Question Details

franz.hausam…, Home Buyer in Elizabeth, NJ

What is the difference between Condo or Coop?

Asked by franz.hausammann, Elizabeth, NJ Sun Apr 6, 2014

Help the community by answering this question:


The Condo
AKA: Condominium
Basic Structure: Just like buying a house, a condo is when a buyer purchases a part of a building. It's basically like owning an apartment, but instead of paying rent, the buyer is paying a mortgage. A condo owner also has an undivided interest in certain common elements of the building, such as the lobby, lounge, and/or gym facilities.
Pros: The assessed value of a condo is usually higher than a co-op that is of similar size, design, etc. Applying for a mortgage is typically easier than for a co-op because the owner of the condo will own it outright. It is also easier to make deductions on taxes for condo mortgage payments.
Cons: Because the assessed value is usually higher than a similar co-op, property taxes are also usually higher. Condos often cannot acquire financing as an entity for large capital improvement projects, thus making it difficult to do major remodeling projects or other similar ventures. Condo boards have little power to prevent the transfer of property to other (possibly undesirable) owners.

The Co-op
AKA: Housing Cooperative
Basic Structure: Without getting too deep into all the legalities, basically a co-op is when a buyer purchases a share (or shares) of a corporation that actually owns that building/residence, and the shares reflect his equity in that corporation.
Pros: Property tax is generally lower for a co-op than for a condo, and the taxes are usually included in monthly payments. The building's corporation can acquire capital for large projects, and the repayments can be spread among the many co-op residents. For celebrities, the transfer of ownership can be kept hidden because it's technically a transfer of stock and not real estate and therefore not on the public record. Co-op boards have legal power to prevent the sale of shares to others for a variety of reasons, such as concern over someone being able to make payments or celebrities who might tarnish the co-ops reputation.
Cons: First and foremost, you have to deal with co-op review boards that determine if you're a good "fit" for the residence. Because the property is really owned by a company, some financial institutions will not provide mortgages for co-ops, which leads to smaller lender selection pools and overall higher mortgage costs. Monthly fees are generally higher because they include taxes, mortgage payments, and fees for maintaining common areas and facilities. Co-ops are usually assessed at lower values than similar condos.

By George Perkins

Simon Watson
Keller Williams Realty
(925) 286-7112
(510) 859-4773
BRE 01881304
0 votes Thank Flag Link Mon Apr 7, 2014
Thank you verry much for your competent answer. However I have one more Question. What would be the consequences to the invidual coop owner, if the coperation would declaire bankrupcy? Would the induvidual coop owner loose his appartement, considering he allways paid his obligations to the company.
Flag Wed Apr 9, 2014
They appear to be the same, but are not; co-op ownership represents an interest (i.e. stock) in realty; condo ownership is actual ownership of realty. 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. Again, co-op ownership represents an interest (i.e. stock) in realty; condo ownership is actual ownership of realty. You decide what's best for you.
0 votes Thank Flag Link Mon Apr 7, 2014
In a condo, you own the property, the four walls and what is within. In a co-op, you own stock in the corporation that owns the real estate.
0 votes Thank Flag Link Mon Apr 7, 2014
What happens if the Corporation goes in default ifen you as part ownwer allways payd his morgage?
Flag Mon Apr 7, 2014
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