If you’re considering buying an apartment, you’ll be looking at either a condominium or a co-op, also know as a cooperative.
There are a few important differences between condos and co-ops. Co-ops are apartment buildings owned by a corporation. You do not own your apartment; instead you own shares of stock in the corporation and are given a lease to rent your apartment. With condominiums, or condos, you own the title to your individual apartment.
What are the pros and cons of owning a condo?
Pros:
• Assessed value of a condo is typically higher than a co-op.
• Generally easier to make deductions on taxes.
Cons:
• Higher property taxes.
• Condo boards have little power to prevent the transfer to other (possibly undesirable) owners.
What are the pro and cons of owning a co-op?
Pros:
• Lower property taxes, which are normally included within your monthly payment.
• Co-op boards are able to decide who they would like to have move into the building when someone has decided to sell
• Most tenants generally stay longer in a co-op.
Cons:
• If you’re purchasing a co-op, you may have to be approved by the co-op board.
Seth, a real estate lawyer, explains: “A co-op is subject to much stricter rules. Typically, if you want to sell it to another buyer in the future, the co-op board of directors, who are other people who live in the building, they have a right to say yes or no to your buyer and they can say yes or no for any reason whatsoever.”
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VIDEO TRANSCRIPT:
SETH: A condo is nothing more than a subdivision vertically. That’s all it is. So typically you’ll have 100 acres of land and a developer comes in and he splices it up into 100 acre, 100 single acre homes.
SETH: All right? Picture that same concept but vertically in a building, and that’s what a condo is. You own the title to your individual apartment.
SETH: A co-op on the other hand, is when a building is converted from landlord to corporation and landlord owns all the shares of the corporation and then he sells little bits of the shares off to individuals and each share is associated with a single apartment.
SETH: So when you buy into a co-op, you own shares of a corporation and the corporation gives you a lease to rent the apartment.
SETH: A condo is real property, you own it and you therefore have more of a right to do with it what you want. You can sell it to anyone you want, for the most part, and you can refinance it so it is yours.
SETH: A co-op is subject to much stricter rules. Typically, if you wanna sell it to another buyer in the future, the co-op board of directors, who are other people who live in the building, they have a right to say yes or no to your buyer and they can say yes or no for any reason whatsoever.