What is the Difference between a Condo and a Co-op?

A condo and a co-op are both apartments in a shared building, but the ownership structure is completely different. When you buy a condo, you own your individual unit outright. You get a deed, you can finance it with a standard mortgage, and you can sell it to whoever you want subject to any right of first refusal the association might have. The condo association owns and maintains the common areas, and you pay monthly HOA fees for that upkeep. When you buy a co-op, you don't actually own your unit. You buy shares in the corporation that owns the entire building, and those shares come with a proprietary lease that gives you the right to occupy a specific unit. You don't get a deed. Financing is different because you're buying shares, not real property, and fewer lenders offer co-op loans. Co-op boards have significant power to approve or reject buyers, which makes selling more complicated. Monthly maintenance fees in co-ops tend to be higher than condo HOA fees because they often include property taxes and sometimes utilities. In New York specifically, co-ops are far more common than condos, especially in Manhattan. Co-ops tend to be less expensive per square foot than comparable condos, but the board approval process, stricter rules about subletting and renovations, and limited financing options are the tradeoff. For someone moving to New York and looking for affordable housing, understand the differences before you start shopping because they affect everything from how you finance the purchase to what you can do with the unit after you buy it.

They look the same from the outside but they're very different when it comes to ownership. With a condo you actually own your unit, just like owning a house, except you share common areas with other residents. You get a deed, you can get a mortgage, and you can sell or rent it out relatively freely. A co-op is different. You don't own the apartment at all. You buy shares in a corporation that owns the entire building, and those shares give you the right to live in a specific unit. Because of that, co-op boards have a lot of power. They can approve or reject buyers and renters, require large down payments, and have strict rules about subletting. In New York especially, getting approved by a co-op board can be a process in itself. Co-ops are usually cheaper to buy than condos, which is why you hear about them more when people are looking for deals in the city. But they come with more restrictions. If flexibility matters to you, a condo is the easier path. If price is the priority and you're okay with the board approval process, a co-op can make sense.

Spirit M has given a really good answer. I would only add that in California an important factor is the actually Tax Parcel. A condo has an individual parcel ownership with it's own tax bill and a Cooperative has all the units sharing one property tax bill. Not sure any of this matters when renting.

Hello Robert - Co-ops and condos are similar in that residents live in separate units with shared common areas (i.e., pool, recreation center, tennis courts, playground). The main difference between a co-op and a condo is the ownership structure. When you purchase a condo, you own the actual unit (as you would own a house) and a percentage of the common areas. When you buy a co-op, you are not purchasing real estate, bur rather shares in a corporation; at closing you are issued stock certificates and a lease (called a "proprietary lease") that enables you to live in a unit. There are a number of other issues to consider when considering a co-op vs. a condo, including the way taxes are handled, and whether an interview with the Board is required. I would be pleased to answer any other questions you may have.

Hi Robert, This is a common question, especially for people moving to New York for the first time. Both are types of apartments, but the ownership structure is different. In a condo, you actually own the apartment unit and have more freedom to sell or rent it. In a co-op, you do not own the unit directly. Instead, you own shares in the building’s corporation, which gives you the right to live in a specific apartment. Co-ops usually have stricter board approvals and rules. Because of these differences, co-ops are often cheaper, while condos offer more flexibility. If you are new to this, it can also help to learn from communities that are professionally managed. Companies like Kirkpatrick Management Company often work with associations and help keep residential communities organized and well managed.