Condo vs Co-op

What are Condominiums?

Condominiums, also known as “condos,” offer many of the same amenities as home ownership, except that the development is managed by an “association” that acts much like a cooperative’s board of directors (see below). Individual owners of condominium units share in ownership of common areas, such as corridors and recreation rooms indoors and courtyards outdoors. The association makes sure that the common areas are kept in good repair. There may be an on-site superintendent, or there may be a maintenance crew on call.

Sale and Ownership

Condominium sales are treated just like house sales; the buyer secures a mortgage and on the day of purchase signs an actual deed for the dwelling. That deed does not grant the same level of ownership that a deed to a house would provide. All the buyer really owns is the air space within the unit. Because the common space is jointly held by all the residents, they are restricted and often prohibited from making any changes, even beneficial ones. Thus, a condominium owner who wants to renovate indoors can install new fixtures, tear out non-supporting walls, even install a new kitchen or bathroom. That same owner is probably not allowed to do any exterior painting or do any gardening outdoors, not even moving a bush or planting a tree. (In some complexes, property is set aside for this purpose, but even then any plantings must conform with the overall character of the development.)

Condominium Property Characteristics

Condominiums can take many forms structurally. They may be like regular apartments, or they may be townhouses. In fact, many are converted apartment houses or townhouse complexes. Some condominium communities actually offer individual standalone houses; these communities look like typical housing tracts, but again the residents own only the air space inside their homes. Even though each may have a fair amount of property, that property is managed by the association and not the individual owners.

Co-op

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.