Co-op vs. Condo

Co-op

Type of Ownership - Own shares in a corporation that owns the building. Proprietary Lease establishes occupancy terms. There is no deed or recording of sale information.

Condo

Type of Ownership - The deed is recorded at the county clerk. It is transferable, like any other property

Co-op Liability - shared by all

Condo Liability - either by the association or the individual condo owner responsible for the occurrence, not shared equally.

Co-op

Maintenance - Co-op owners pay a monthly maintenance fee that usually consists of real estate taxes, general building maintenance and loan payments on the underlying property mortgage, commonly taken when the building was converted to a Co-op from an apartment building. In most instances up to 60% of the maintenance is tax deductible.


Condo

Common Charges - Condo owners pay a monthly fee that consists of basic common area building maintenance. Generally not tax deductible.

Co-op

Financing - Most co-ops will have strict financing restrictions (down payment minimum, income minimum, etc.).

Condo

Financing - The only restrictions are lender required.

When financing a co-op property, there are usually a list of approved title companies that will write the title insurance.

The majority of lenders will allow condo financing in almost any of the lower 48 states, however co-op mortgages are generally limited to areas with high cooperative housing density, such as New York, New Jersey, Washington DC, etc.

Co-op No ownership of "real property" therefore there is no Mortgage Tax on financing (this is very applicable in New York City where mortgage tax is almost 2% of the loan amount).

Condo Ownership of "real property" and therefore the borrower must pay mortgage tax.

Co-op

Board Approval - The Board, usually consisting of elected residents, co-op owners, that accept or reject prospective owners or tenants. There is no appeal. Board may or may not charge an application fee, typical fees range from $200 to $500 and are non-refundable.


Condo

Board Approval - Almost never required

Co-op

Coop Attorney - A Lawyer will handle the closing, transfer documents and legal matters for the co-op.

Condo

Condo Attorney - Usually does not exist

Co-op

Sale - Requires Board approval of the buyer. Most Co-ops have a transfer fee or flip tax that each Co-op seller must pay when they sell.

Condo

Sale - Usually no approval required or Condo fees required.

Co-op

Real Estate Taxes - Usually included in monthly maintenance fee. Some Co-ops have abatements that do run out and will increase taxes later on.

Condo

Real Estate Taxes - Each Condo owner pays tax on their unit.

Co-op

Sublet or Renting - Co-op Boards require prior Board approval. Most Boards will not permit subletting or renting.

Condo

Sublet or Renting - Usually there are no restrictions.