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Condo VS Co-op


Cooperatives and Condominiums are the most common forms of resident-owned multifamily housing. Cooperatives and condominiums have some similarities and some differences. Below is a comparison of the advantages and disadvantages of the two models.


Co-op Condo
Ownership Coops are collectively owned by shareholders/members joined in a corporation. As part owners of the corporation, members are entitled to live in one of the units, and are also part owners of common areas. Residents own their units in a building rather than owning shares of a corporation. Moreover, all residents are part of the condo association that owns the common areas.
Purchase Price and Move-in Costs Someone purchasing a co-op unit can use a “share loan” (see key terms) to pay for their share. Condo owners take out a mortgage. They also pay closing costs which include title search and title insurance fees, tax proration, etc
Monthly Costs Members pay monthly carrying charges to the co-op. This amount covers the operating cost, property taxes, blanket mortgage on the property, reserves, and in some co-ops, it may cover utilities. Residents pay monthly condo fees to the condo association which covers the operating costs, insurance and reserves for the building. Residents with mortgages make payments (principal and interest) to their lender.
Maintanance The co-op is responsible for maintenance to the exterior and common areas. Members are responsible for maintenance and repair of their individual unit. Some co-ops will chose to collectively share the cost of individual unit repairs. Residents are responsible for maintenance and repairs to their individual unit. The condo association is responsible for common area maintenance.
Financial Liability Members have no personal liability on a co-op’s blanket loan. The occupancy agreement calls for members to pay a monthly carrying charge. Members with a share loan are individually liable to their lenders for the amount of that loan. Residents are responsible for paying monthly fees to condo association and are liable to their mortgage lender for the amount of their mortgage.
Tax Benefits Members can deduct their prorated share of the co-op’s mortgage interest and real estate taxes on their personal federal income tax in addition to the interest paid on the individual share loans for co-op mortgage. Residents pay their own taxes through monthly escrow payments or directly to their local government.
Building Improvements Building improvements are decided upon and paid for as a cooperative. The decisions are made and paid for by the condo association.
Individual Unit Improvements The rules for improvements are laid out in the bylaws or occupancy agreement. Members who are considering improvements should review those documents and talk to the board before making any changes. Individual unit improvements generally do not need approval from the condo association. The cost of improvements is completely the responsibility of the owner of the condominium.