Co-op vs. Condo

New York real estate can throw consumers for a loop when it comes to the different types of ownership in regards to apartments. Many first time home buyers get deterred simply because the difference between cooperative units and condominiums can be difficult to understand at a glance.

There are many key differences between Cooperative apartments (“co-ops”) and condominiums (“condos”). When you purchase a co-op, you are buying stock in the corporation which owns the apartment building. In exchange for purchasing the shares of stock, the building then "leases" the co-op unit to you under a long-term proprietary lease.

Co-op owners pay a monthly maintenance to the corporation for various expenses related to maintaining and operating the property, taxes and any mortgage the building may have.

When you purchase a condo, you are buying an individual parcel of real property – just like a house or townhouse. With condos, the building is divided into individual condos and a common area where the owner of the condo unit owns the actual apartment and an undivided interest in the common area. As the owner of the condo unit, you will be responsible for paying your own real estate taxes, as well as paying for your share of the common charges which cover the expenses to maintain/operate the common areas. Some benefits to owning a condo are that the appreciation of your unit tends to increase at a higher rate than co-ops and many common charges are lower than co-ops maintenance charges. This means you'll build more equity, much faster, in a unit. Co-ops have many policies to follow in regards to subletting, pets and renovations. Condos usually allow the owners complete freedom of their unit

Usually, condos cost significantly more than co-op units. That being said, a condo buyer also has additional closing costs for things such as title insurance and mortgage recording taxes. Co-ops typically cost less than a similar condo unit, but require a 20% - 30% down payment, as well as board approval before purchasing.

Here are a few key differences to make note of:

Condos are real property, while co-ops are owned shares in a building's corporation.
Condos usually cost more than co-ops do.
Condos require less of a down payment, while co-ops require 20% - 30% down.
Co-ops require board approval (application, interview, DTI, etc), condos do not.
Co-ops typically have more house rules, while condos do not.