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Condo or Co-op? What to know before you buy.

July 25, 2016

Are you in the market for a new place? Considering purchasing a condo or joining a co-op? There are some things you should know about co-ops and condos, how they differ from each other, and what to look out for before you sign on the dotted line. Let’s cover the differences and go over some of the pros and cons of each.

What’s the  difference between a co-op and a condo?

A Co-op isOffice worker a cooperative of shareholders, not a physical piece of property. When you purchase a co-op, you are NOT purchasing a single unit, you are purchasing shares in a corporation that owns the entire structure and all of the units within.

A Condo (or condominium) is a piece of real estate property within a larger complex. Townhomes, duplexes, apartments, and even commercial warehouses can be considered condos. Condos are bought and sold like single family homes.

Simply stated:

  • When you own a condo, you own a unit in a complex.
  • When you own a co-op, you own shares in a company which controls the entire complex.

So what does this mean for you? In terms of living in the space from day to day, the experiences in both condos and co-ops are very similar, but the aspects of ownership are different.

Living in a Co-op

Co-op owners don’t technically own an individual unit, therefore they are considered tenants (in a building they own a share of). So they don’t pay property taxes, the corporation covers taxes on the property as a whole.  Maintenance of all of the shared areas of the larger structure (parking, laundry, swimming pool, etc.) is handled by a board of elected shareholders. Prospective buyers are reviewed and approved by the board, and instead of a mortgage, buyers secure a loan to purchase their shares in the corporation.

 Living in a Condo

Condo owners are property owners. It’s like owning a single family home. You obtain a mortgage, pay property taxes on a unit, and own everything inside of the four walls. A condo owner is accountable to a Home Owners Association (HOA) of elected residents which oversees and maintains all of the shared areas of the larger structure (parking, laundry, swimming pool, etc.).

Pros and Cons: Co-ops & Condos

Pro:  Co- op Boards and Condo HOA’s provide a cohesive community with amenities, a stable quality of living, and they work to protect your property value.

Con: Boards and HOA’s can be a lot of drama and red tape. There are typically a lot of rules and regulations to abide by, how restrictive they are depends on the particular board or HOA.

*If you’re in a condo, a HOA tends to be a little more permissive than a co-op board. Buying and selling your unit is easier, and often a certain percentage of the condo owners within a complex are permitted to rent or sublet their place whereas most co-op boards prohibit renting.

Pro: As a condo owner, you own real property.

Con: As a condo owner, you own real property.

Some people think it’s the American Dream, for others it’s too many headaches.

Con: Co-op loans can be difficult to obtain and often require extraordinarily large down payments.

Both co-ops and condos can be great places to live and excellent investments, but they are two different kinds of investments so speak with a financial advisor before diving in. If you’re on the fence about living under the rule of a HOA or Board, spend plenty of time meeting with the board or HOA members, and even chat up some of the current residents to get a good feel for the vibe. Good luck and happy hunting.









June Russell

Personal Lines Account Manager


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