What are the differences with a Condo and a Co-op.?

Asked by Perfectphoto, Lynbrook, NY Thu Feb 7, 2013

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Jim Simms’ answer
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Sun Feb 10, 2013
Both are tricky to finance, but co-ops are twice as hard, makes um harder to buy or sell. Don’t forget to plan an exit strategy, good luck,

Good luck,
Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
Web Reference:  http://jamessimms.com/
0 votes
Michael Rich…, , New York, NY
Sun Feb 10, 2013

When you purchase a condominium unit, you are purchasing real estate. The space between the walls in which you live (assuming you are not an investor renting it out) you own outright. You also own a percentage of the common area (hallways, staircases, elevators, roof, boiler. etc.) in common with every other unit owner. You pay your own real property taxes and monthly common charges to the condo association to cover the cost of maintaining and operating the condominium.

A coop is different. You purchase shares of stock in a corporation which owns the real estate. Along with you shares of stock, you receive a proprietary lease entitling you to reside in a particular apartment. You pay monthly maintenance charges to the coop to the cost of maintaining and operating the real estate owned by the coop corporation, plus real estate taxes and usually a mortgage on the real estate which is in addition to any loan you have taken out to purchase your interest in the coop. While the sale of a condo unit is subject only to the condo's right of first refusal to buy the unit on the same terms that a buyer has contracted to purchase the unit from the seller, a coop apartment is subject to an approval process by the coop's board of directors who can reject the purchaser for any legal reason.

Michael Richman
Licensed Real Estate Associate Broker
KIAN Realty
450 7th Avenue Suite 1501
New York, NY 10123
212-757-8268 x220
1 vote
Anna M Brocco, Agent, Williston Park, NY
Thu Feb 7, 2013
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.
1 vote
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Tue Feb 19, 2013
Good morning Perfectphoto,

The fundamental differences under NY Real Property Law are as follows:
CONDOMINIUM: is considered "real property" similar to a house. You get a DEED to reflect your ownership of the property.

COOPERATIVE: is not considered "real property." What you're buying is shares in a corporation. The corporation owns the "real property" or the land and its improvements (the building where the Co-Op is located).

Financing: Traditionally more difficult to finance a Co-Op than a CONDO, but here in New York, with the prevalance of Co-Ops, there are local Lenders who lend often for Co-Ops. In the current lending environment we Lenders are finding it increasingly difficult to lend both in Condos and Co-Ops for a variety of reasons including poor management, delinquent Homeowner's fees, high investor concentrations to name but a few.

My advice to you is this: meet with a Local Mortgage Banker to get prequalified for mortgage financing. I personally meet many potential Buyers who believe (mistakenly) that it is both cheaper and easier to buy a Condo or Co-Op. Often when I prequalify them and demonstrate how they could both own a home and how the costs are comparable (sometimes less!) to a Condo or Co-Op purchase, I find my clients' eyes are opened to different possibilities.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services

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0 votes
Joseph Runfo…, Agent, Staten Island, NY
Sun Feb 10, 2013
There are many differences. Here are a few short highlights: Co-op's come with stock certificate and proprietary lease, condo's with a deed. The approval process and building rules are usually stricter with a co-op. Co-ops make up a much bigger percentage of the city’s housing stock, and they tend to be less expensive than condos. Buying a condominium also involves additional closing costs. A condo purchase will require title insurance, and the mortgage recording tax, which in New York City comes out to about 2 percent of the face value of the mortgage. These expenses are not present when you buy a co-op although co-op seller's usually pay a "flip tax". Many condos now ask prospective buyers to submit an application that includes much of the same information that co-ops require (showing your net worth, liquid assets and annual income, as well as tax returns and brokerage statements prove these numbers). However co-ops are much stricter about their financial requirements. Many co-ops require a down payment of at least 20 percent of the purchase price, and sometimes 25 to 50 percent. There are exclusive buildings don’t allow financing at all. Many co-ops do not allow sub-lets and those that do that allow renters usually reserve the right to approve them.
0 votes
Arlynn B. Pa…, Agent, Roslyn Heights, NY
Thu Feb 7, 2013
A condo is short for a condominium. This is real property whereby the purchaser is issued a deed representing the property plus a percentage of the common area and will pay real property taxes on both the unit as well as taxes on their percentage of the common areas. Additionally, there is usuually a monthly common charge for the maintenance of the common area. The condo holder can have the taxes included with their mortgage payments, much like a single family homeowner would. Condos may be sold as real property, to any buyer that the seller chooses, at any price that the seller is wiling to accept, without any Board of Directors Approval.

A co-op is short for a cooperative corporation. This is treated in many ways as real property, but it is not. When purchasing a co-op, the purchaser is will receive on closing shares in the corporation plus a proprietary lease for that unit. The shares represent a percentage of the total amount of corporate shares, usually based on the unit's square footage. The unit holder's percentage of property taxes on the entire building are included in the maintenance charges. Many times the maintenance charges will also include the heat (oil or gas), gas for cooking, water, landscaping and snow removal in addition to the unit holder's percentage of the entire building's mortgage principle & interest. To purchase a co-op, the prospective purchaser will complete an application , along with bank statements, references, prospective occupants to the unit, a mortgage committment and whatever application and move-in fees are required by the co-op Board and management company. The Board generally requires a minimum cash payment of 10% and may require 20% of the purchase price. The Board and management company will decide whether a prospective unit purchaser will be permitted to make the purchase . This permission may be denied without cause.

If you have any further questions, please don't hesitate to contact me.

Arlynn B. Palmer, ESQ, CBR, SRES
Associate Broker, Daniel Gale Sotheby's International Realty
Cell: (516)410-3594
Off: (516)484-1800
0 votes
Marshall W.…, Agent, Westbury, NY
Thu Feb 7, 2013
A condominium is a property where the buyer is actually purchasing real estate-you receive a deed which represents that particular unit as well as a percentage of the common areas. A coop is a form of real estate ownership where the purchaser receives at the closing a stock certificate which represents the amount of shares in the corporation that owns the real estate, as well as a proprietary lease for life of that particular unit. In either case, whether condo or coop, the units may sold or given to heirs. A coop buyer is typically required to put down 20% of the purchase price, and the transaction must be approved by the management company and the coop board.
0 votes
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