More and more people are choosing community living, and condos and co-ops are two popular options. While they both offer shared amenities like pools and gyms, the way they’re owned and run is very different.
This article is here to help you understand exactly what a condo and a co-op are, and to clearly outline their key differences and similarities.
Before you jump into buying property, it’s important to know what you’re getting into. Understanding the difference between a condo and a co-op can save you a lot of headaches down the road.
What is a condominium?
With a condominium, you own your individual unit outright. Your ownership includes the interior space inside the walls of your condo.
You also share ownership of the building’s common areas, such as hallways, lobbies, elevators, and amenities like swimming pools and green spaces.
Governance and management of a condominium
A condominium association is in charge of maintaining the shared common areas in the building. The association is governed by an elected board of directors who make decisions about maintenance, budgets, and rules for the condo community.
Many condominium associations employ a community association manager to handle the day-to-day operations of the building.
What is a cooperative (co-op)?
The main thing to know about a co-op is that you don’t actually own your unit. Instead, you own shares in the corporation that owns the whole building. Because of this arrangement, you have what’s called a proprietary lease, which gives you the right to live in your unit.
A co-op is managed by a board, which handles the building’s finances and general upkeep. The co-op board also has the power to approve or deny prospective members. This is a big difference from buying a condo. The co-op board will likely want to review your finances and interview you to make sure you’re a good fit for the community.
Key Differences Between Condos and Co-ops
While both condos and co-ops offer apartment-style living, they differ in some fundamental ways.
Ownership and Financing
With a condo, you directly own the unit. With a co-op, you’re buying shares in a corporation that owns the entire building. This affects how you finance your purchase. Condo owners get individual mortgages, just like with a house. Co-op residents, on the other hand, may face restrictions on financing, depending on how healthy the co-op’s finances are as a whole.
Approval Process
Co-op boards wield considerable power over who gets to live in the building. They have the right to approve or deny potential new residents, something that condo associations typically have less control over. Because of this, co-ops tend to have stricter rules and regulations than condos.
Prevalence and Location
Co-ops are more common in older cities, like New York City, than in other parts of the country. While you can find them in Florida, they’re generally much more prevalent in the Northeast.
Closing Thoughts
Condos and co-ops are both forms of community living, but they differ in terms of ownership, governance, the approval process for new buyers, and financing.
Before you decide where to live, it’s important to understand those differences and how they might affect you.
If you’re unsure about the rules of a particular community association, consider seeking professional advice from a qualified real estate agent or attorney.