What is the difference between condominium and co op

Cooperative buildings, also known as co-ops, are often associated with New York City. That's because it has so many of them. According to the NYC Department of Finance, there were , co-op units in Manhattan alone in , compared to 68, condominium condo units. But what are the differences between condos and co-ops? Learn about the differences, including their ownership structure, financing options, taxation, prices, taxes, fees, and oversight entity. Both co-ops and condos answer to an oversight entity.

For co-ops, it is a committee or board; for condos, it is a homeowners association HOA. One is not better or worse than the other. Some prefer condo residency because they offer outright ownership. On the other hand, co-ops sell fractional ownership through shares that are specific to the unit. Either type of dwelling qualifies for homeowners insurance. According to Palion:. In fact, the structure itself is not the responsibility of the co-op buyer.

That's because they have only purchased the right to occupy the unit, not the unit itself. Many condo complexes limit the number of rentals as a percentage of the total units. This can help prevent the complex from turning into an apartment rental, which can lower values. Most co-ops do not allow subleases or rentals.

Whether it's a co-op or condo, a bank can still repossess it in the event a buyer is unable to pay back the mortgage. However, only certain banks participate in co-op lending. Condo units—which can be part of a single level, multiple levels, or detached—are financed separately.

The property is secured by a trust deed or mortgage, according to state laws. In the case of condos, HOAs do not hold the power to prevent a sale or purchase. When it comes to dues and fees, both a co-op and condo buyer pay monthly maintenance. But the condo owner pays to the HOA, while the co-op member pays to the board. Fees and dues paid to the HOA are often for items such as maintenance of common areas, the exterior of the building, the roof, and association management. It could also include some of the utilities, such as water and trash pickup.

And it could include amenities such as the clubhouse, exercise facilities, swimming pool, or spa. In the case of a co-op, the building pays the tax bill. It is divided among the tenants and factored into their monthly maintenance fee; this can be used to pay the salaries of a doorman, staff for upkeep, and building superintendent.

In a condo, because the buyer owns the unit, the tax bill applies directly to the unit. A condo unit is assessed separately for tax purposes with the understanding, in most cases, that the buyer owns the space between the walls, floors, and ceilings—usually to the midpoint.

Taxes are then paid directly to the county assessor or through a lender's impound account. The fees paid to a co-op might be higher than a condo's HOA. If improvements are proposed to the common area of a condo, owners who are opposed to the project often walk away dismayed. When buying a condo, there is no selection process of the neighbors.

There also isn't a way to prevent a booming drummer from moving in next door, for instance. Co-op shareholders, on the other hand, fully vet each other during the admissions process. They may also request letters of personal and professional recommendation.

The process may first appear to be a severe violation of confidentiality. But shareholders approve of it because it allows them to pick and choose others who buy into the co-op and live in the building.

In contrast, condo owners can live in a condo complex for years and never truly know their neighbors. Because co-ops are governed by a committee, they have the right to reject or approve a potential fractional owner. But Fair Housing rules were enacted to prevent a co-op board or committee from taking the selection process too far.

Discrimination is illegal. Co-ops can be more costly than condos in the long run. This is even more true when a buyer holds a personal mortgage while also paying the building's co-op mortgage. Some co-ops prefer owners who maintain the unit as their primary residence. As a result, foreign buyers, investors, or second-home buyers may not be able to acquire a unit. Both offer the benefit of not having to handle all of the routine upkeep you get in a house, but there are some cons to go with the pros.

Plus, co-ops are somewhat unique when it comes to ownership. Here are some of the basics you need to know to help you make an informed decision between the two. Thinking about buying a condo? Be sure to look into condominium insurance. What is a co-op? The differences between a condo and a co-op Here are some of the basics you need to know to help you make an informed decision between the two.

Ownership Condo: Buying a condo means you own the real estate, including an interest in common areas like lawns. A co-op board will often have to vote you in as a new owner—and approve whomever you sell to, which can be time-consuming. Fees Condo: Condos charge maintenance fees, usually on a monthly or quarterly basis. This covers costs like lawn mowing, snow removal and certain routine maintenance.

Co-op: Co-ops will also charge fees, but they are often higher in a co-op and sometimes include items like utilities. However, co-ops are less likely than condos to charge special assessments for things like capital improvement projects. Regardless, maintenance fees should be factored into your monthly expenses.