What are Co-Ops?

A cooperative, more commonly known as a co-op, is generally much more like apartment living than a condo. A large number of co-op buildings actually started out as rental buildings but were later converted. Co-ops are more restrictive than condominiums, but they also offer residents greater say in several aspects of how the property is managed.

Ownership "Shares". The owner of a co-op does not own his or her unit. The co-op is a corporation, complete with a corporate board of directors, and each resident is a "shareholder." Co-op buyers do not sign a deed. Instead, they purchases shares of the corporation, shares that include a lease granting use of a specific unit. The number of shares owned is based on the size of the unit.

Mortgage. The "mortgage" that one receives when making a co-op purchase is not really a mortgage but rather a loan to purchase shares. To all intents and purposes, however, it functions as a mortgage.

Maintenance Fees. In addition to the selling price for a co-op, there is also a monthly maintenance fee for upkeep of the property. It can include utilities, maintenance and repairs, and property taxes. This fee can range from a small amount to levels higher than mortgage payments. Parts of the maintenance fee may be tax deductible.

Improvements and Additions. Because they do not own their individual units, co-op owners are generally not allowed to do anything inside their apartments beyond simple maintenance. A co-op owner cannot put in a new kitchen or bathroom or tear down any walls. In this regard, co-op living is very much like apartment living. The positive side of this is that residents are not responsible for making their own repairs; the on-site maintenance crew or superintendent handle those.

Next Steps

Contact a qualified real estate attorney to help you navigate issues relating to home ownership.

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