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

The thread above has the core distinction right, so I will not repeat it: with a condo you own real property and get a deed, with a co-op you own shares in a corporation and get a proprietary lease that entitles you to occupy your unit. Both look like apartments from the inside. Everything else follows from that one difference. What I want to add is the four things that actually decide this for someone moving to New York for a job, because none of them are in the answers above. Flip tax. Most co-ops charge one, and it is not a tax, it is a transfer fee the corporation collects when you sell. It is set by the building's own bylaws and commonly runs 1 to 3 percent of the sale price, or a fixed amount per share. It is usually paid by the seller. If you might move again in three or four years, a 3 percent flip tax on the way out plus brokerage is a real number, and it can wipe out the savings that attracted you to the co-op in the first place. Ask for the figure in writing before you bid. The recognition agreement. Because you are pledging shares rather than real property, co-op financing requires a three way document between you, your lender and the co-op, usually the Aztech form. Not every lender does co-op lending, and a building can and will reject a lender it does not want. Line up a lender who closes co-ops in New York specifically, before you start looking. Land lease. Some New York buildings, both co-op and condo, sit on ground the building does not own. The building leases the land, and the lease has an expiration date. As that date approaches, values fall and lenders get nervous, and rent resets can spike maintenance dramatically. This is the single largest hidden risk in a cheap looking Manhattan apartment. Ask directly: does this building own its land, and if not, when does the ground lease expire. Mitchell-Lama and other restricted stock. Some of the genuinely affordable New York co-ops are limited equity or Mitchell-Lama units with income caps and restrictions on what you can resell for. They are excellent housing and a bad investment, and that is fine as long as you know which one you are buying. The practical trade off for a relocating buyer looks like this. Co-ops are cheaper per square foot, often noticeably so, and closing costs are lower because you are not paying title insurance or mortgage recording tax on real property. In exchange you face a board package and interview that will ask for tax returns, bank statements and reference letters, a board that can reject you without stating a reason, typical requirements of 20 percent or more down, post closing liquidity requirements, and tight rules on subletting. Condos cost more up front and at closing, but the approval is essentially a formality, financing is easier, and you can rent the unit out. If there is any chance your job takes you elsewhere in two years and you would want to lease rather than sell, that alone points at a condo. One timing note. This question was asked in 2021. Rates, sublet policies and board liquidity requirements have all tightened since then, and several buildings have raised down payment minimums. Verify anything you read about a specific building against its current offering plan and financial statements rather than an older listing. I am a real estate professional, not an attorney, and New York is one of the few states where a real estate attorney runs the transaction rather than an escrow company. Hire one early. Their review of the board minutes and building financials is where the actual risk gets found. I am Zoltan Peresztegi and I work Palos Verdes and the South Bay in Los Angeles, so I am not your New York agent. But I am glad to help you think through the questions to put to the agents you interview there, and a good Manhattan or Brooklyn agent will have opinions about specific buildings that no general article can give you. Zoltan

Buying a condo means owning your specific unit outright with a deed, while buying a co-op means purchasing shares in a corporation that owns the building, which grants you a proprietary lease to your specific unit. There are pros and cons to each which you would need to consider. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

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.

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.

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.

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.

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.