Some Difference between Coops & Condos

Ownership - The main difference between condos and coops is the form of ownership each takes. A condominium is real property and ownership is evidenced by a deed allowing the entire bundle of rights that come with real property ownership. Coop ownership is evidenced by shares of stock in a non-profit corporation that owns the building in combination with a Proprietary Lease allowing each shareholder the right to occupy an apartment under specific guidelines. Condominiums have a condominium association and coops have a Board of Directors (similar to all corporations), each serves a similar purpose of making decisions on behalf of the owners and shareholders, respectively.

Occupancy Restrictions - Another major difference between coops and condos is the restrictions placed upon the owners of a coop of the occupancy of the unit. The Proprietary Lease may restrict the amount of financing on each apartment, it may restrict a shareholder from renting their apartment to others (splitting), or from having a maximum number of occupants, or from having certain pets, or whatever else the majority of shareholders deem to be best for their building and quality of life. The Proprietary Lease also gives the board of directors the right to refuse any prospective buyers or subfields. Most coops have a very formal application and interview process before the board reaches a decision on who may own an apartment. Condominiums on the other hand have virtually one restriction which is their "right of first refusal." The right of first refusal gives the condominium association first opportunity to buy an apartment from a selling owner at the same terms under contract with a prospective buyer. Condo associations rarely exercise this option.

Feeling of Neighborhood Due to the lack of controls for ownership, condominiums may become more transient in feeling. Cooperative apartment corporations on the other hand tend to be morehomogeneouss and more stable in terms of neighborhood.

Purchase Prices - Coops tend to have lower purchase prices than condos.

Common Elements and Services - Condos generally may be slightly less expensive to maintain over time. Owners of condominiums pay for the common elements (management staff, doormen, plumbing, roofing, common walls, etc.) in the form of common charges, and they pay their taxes separately. Most condo owners are generally responsible for paying their own utility usage. Coops on the other hand pay for the common elements in the form of maintenance charges which generally include everything to upkeep the building, including taxes and frequently utilities. Another component of the maintenance fee that generally does not exist with a condominium is the cost of the underlying mortgage. Some coops and condos offer recreation, parking, storage and other facilities as a part of the common charges or maintenance. It is important to itemize what costs are included in the common charges or maintenance, and what services are offered in return.

Mortgage Vs. Assessments - Coops have no restrictions other than that imposed by the lender in terms of size of underlying mortgage. Underlying mortgages on condos have restrictions. In the event the building needs money, coops may be in a more flexible position not to assess each owner for additional monthly charges.

Settlement Costs - The closing costs to obtain a mortgage for a condominium are more expensive than settlement costs to finance coops. The major differences in New York City are: a mortgage recording tax, title insurance premiums and charges and taxacrosss when obtaining a mortgage for a condo. These items are not required to close on a cooperative apartment loan.

Availability - In Manhattan, even with the recent building of condos and condo conversions of existing buildings there are relatively very few condos. Most buildings, particularly older buildings are coops.

It is up to the homebuyer to become an informed consumer, to identify their personal preferences, look at the spaces, and analyze the cost and benefits of each.