Co-op v. Condo - What's Right For You?
It is a fact that approximately 80% of all new housing built in the United States is built within some form of community association, whether it be a condominium, cooperative or homeowners association. In 2005 alone, over 9,000 condominium units were approved for sale by the New York State Attorney General’s office. Furthermore, for the second year in a row, condominiums in Manhattan have outsold cooperatives. Those in the market for a new home should consider the various differences between a condominium, cooperative, or homeowners association.
Living in a cooperative or condominium offers homeowners a whole new system of benefits and costs to be weighed. Whereas ownership of condominiums provide the benefit of easy resale and mortgage refinancing, a homeowner has little to no control over who his or her neighbor may be. On the other hand, co-ops provide the distinct ability for the cooperative to take on a unique identity and sense of community over time. In general, condominium association boards do not have the ability to approve the resale of a unit. Whereas, in Manhattan, cooperative boards have significantly more discretion when it comes to accepting or rejecting applicant owners or tenants. It should also be noted that the powers of co-op boards differ between New York and New Jersey. Another notable difference is that many New York cooperatives have a transfer fee “flip tax” that must be paid at the time of the sale of a unit.
Furthermore, a basic difference between condominiums and cooperatives is the very nature of the interest possessed. No matter whether the condo is in a basement or a penthouse, the interest being owned is an actual piece of real property. However, in a cooperative, the resident owns shares of stock in the cooperative cooperation.
One should consider the significant differences between obtaining financing for the purchase of a co-op unit or condominium unit. To purchase a condominium unit, the only restrictions are those imposed by the lender or mortgage company. However, financing the purchase of shares in a co-op may include annual income restrictions and down-payment minimums. Additionally, both your finances and personal history can come under scrutiny by a cooperative board. All these issues and more should be taken into account by those seeking their new home.
Is there a federal organization that oversees the Co-op Board of Directors, Co-op Management?
Good morning, Maureen.
The Community Associations Institute, commonly known as CAI, is a national organization with regional chapters. The national website is www.caionline.org . CAI provides educational seminars and conferences to assist cooperatives and condominium association members, management and Boards. CAI also has a very helpful library of publications. I hope you find this helpful.
Thank you for your prompt response.