The Difference Between Condos and Co-ops

• November 13th 2024

by UrbanTurf Staff

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Condominiums and co-ops are two popular forms of housing that have distinct differences. 

A condominium, or condo, is a residence in a multi-unit building in which each unit is owned individually. In addition to their units, condo owners have ownership rights to the common areas in the building, such as the hallways, elevators, and amenities like roof decks and swimming pools. The owners are responsible for paying a monthly or annual fee to cover the maintenance and repair of these common areas, as well as utilities and other services for their individual units.

In contrast, co-op owners buy a share in a corporation that owns the entire building, rather than buying an individual unit. Co-ops also tend to have more stringent rules and regulations than condos. For example, co-op boards may restrict pet ownership, regulate the appearance of units and common areas, and impose restrictions on renting units. Condo buildings typically have associations that impose fewer restrictions, giving owners more freedom to customize their units and make changes to the common areas.

Another big difference is that a condo unit has a tax ID number and a co-op does not, rather the building has a tax ID number. This is one of the reasons a lot of lenders won't work on co-ops because the ownership structure is complicated.

The monthly fees paid by co-op owners and condo owners are also different. A co-op fee typically includes an underlying mortgage and property taxes, in addition to amenity, maintenance and utility costs, which makes the fees higher than a condo. Prices on co-ops are often discounted to offset these high fees.

Lastly, unlike condos, co-op boards often have an approval process for prospective buyers before they are allowed to purchase a unit. During this process, the board often evaluates the buyer's financial stability, employment history, and personal references. The board may also ask for additional information or documentation, such as tax returns, bank statements, and proof of income.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/the_difference_between_condos_and_co-ops/20617.