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Condo vs. Co-op: What's the Difference?

May 03, 2017 2 min read Pamela Dimmick

Key Takeaways

  • Condos give you more control over your unit.
  • You must receive board approval to live in a co-op.
  • Co-ops tend to have more tightly-knit communities.


Thinking of getting out of the rental rat race and into a home of your own? Buying an apartment unit could be just the answer, especially if you're on a budget or a first-time buyer.

Within this market, you'll find apartment condominiums and cooperatives which feature apartment-style units and shared common areas such as a clubhouse, swimming pool, sidewalks, elevators, roofing, and greenbelts. When you buy into either type of property, you are buying into a community.

Though they may look similar in terms of layout and amenities, condos and co-ops have significant differences in terms of ownership. It's crucial to understand what they are and how they align with your needs and preferences.



Condos are real property

With a condo, you will own the actual unit -- complete with a deed. Buying a condo involves negotiating the purchase price, securing financing or paying all cash, and moving in. Your acceptance into the association is based on a successful real estate transaction.

As a property owner, you will be responsible for paying property taxes and monthly condo association fees covering general maintenance and upkeep for common areas.


Condos offer greater personal control

If you prefer greater control over your personal unit, a condo provides more than a cooperative. With a condo, you'll have the ownership rights you'd expect. For example, you can hammer nails into your home's walls or rent out your unit to renters. Some home improvement projects may require board approval before you begin.


Co-ops are corporate entities

With a cooperative, you won't own the actual unit. Instead, you'll own shares of the corporation that owns the building and lease the unit. Rather than being a property owner, you'll be one of many shareholders and tenants.

This type of arrangement is different from a real estate transaction. Financing is available for cooperatives, though some of the more exclusive co-ops may not allow financing at all.

Which brings us to an important point: Your acceptance into the cooperative is subject to board approval. You will be interviewed, your finances examined, and your background checked before being accepted or denied. The Federal Housing Act still applies, but you could be denied for financial reasons or even attitude. For example, if the board prohibits financing and you don't have sufficient cash, you're out. Likewise, if the board feels you won't be willing to comply with its rules and regulations, it has legal grounds to deny your application.

Monthly maintenance fees tend to be higher than the fees imposed on condo owners. They cover expenses for the entire building such as mortgage debt, property taxes, insurance, payroll, utilities, and general maintenance.


Co-ops are member-controlled

If you want to be part of a larger group, a co-op could be a great choice. As a tenant, you will likely have less control over your individual unit as opposed to an owner. Subletting, for example, will depend on the terms in your proprietary lease. Renovations will require board approval.

However, as a shareholder of the cooperative, you do have an interest in the property and have a say in the building's future. Because of the collective "we're in this together" nature of this type of arrangement, cooperatives tend to have closer-knit communities as well.


What you can do next

Decide whether you prefer individual or group ownership. If you tend to do your own thing, a condo is probably the better choice. If you're more group-minded, a cooperative could be a good fit. Thinking this through will help you decide which ownership model best suits your needs and result in a more focused and productive apartment search.


Pamela Dimmick is a freelance writer who specializes in business, technology, and communications.


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