Many people looking to buy a property in New York City are often debating between investing in a condominium or a cooperative. But what is the difference? Before choosing one over the other, let's review their definition, your ownership rights and what every buyer should know before acquiring such properties.
What is a condominium?
A condominium is a real property transaction where ownership rights are fee simple, that is, the broadest form of ownership available. You are allowed to you to use and possess your property and you may own your condo in any form you wish (in severalty, as joint tenancy, as tenants in commons or tenants by the entirety).
With a condominium you own real estate - the space inside the unit - and you share in the ownership of the common elements such as the swimming pool, the walkways or the garage. As such, you will receive a deed to your unit that will include an undivided interest in the common areas. You can learn more about your rights in the condominium bylaws. Subletting is possible with some restrictions depending on the condominium building.
What is a cooperative or co-op?
With a co-op, you own share in a cooperative's corporation, which is not real property but personal property. Since you do not own any real estate, you do not have fee simple ownership rights. You own shares which reflect equity in the corporation and instead of a deed, you will receive a proprietary lease and stock certificates.
A cooperative is a not-for-profit corporation, a joint venture with its shareholders, formed for their benefit and governed by them. As such, the cooperative is the one owning the land, the building and all rights and interests. In short, you have a right to occupy your unit and use the common areas and facilities. And of course, unlike with buying a condo unit, we will need to submit a thorough application known as a board package that is unique to each co-op. This package will be reviewed, approved or denied by the co-op board based on a variety of personal and financial documents including but not limited to your purchase application, a contract of sale, employer and personal reference letters, your income tax returns, a financial statement listing assets and liabilities...Finally, subletting is much more restricted and is some occasions, not allowed.
What is a Condop?
Some of you might have heard of a hybrid between a condominium and a cooperative known as Condops? What is it you ask?
A condop is a mix-used building where the residential portion (co-op) is separate from the commercial component (condo). This form of property is appealing to many developers or sellers for tax reasons. They retain ownership of the non-residential space in the building that they use for commercial purpose. In a condop, a buyer will receive co-op corporation share and a proprietary lease. Condops are usually based on the 80/20 rule where 80% of the building is used for residential purpose and the remaining 20%, for commercial purpose.
Do you have additional questions? Are you looking to buy a condominium or a cooperative unit in New York City? Contact our Manhattan office today at firstname.lastname@example.org.