Unlike condominiums, co-op residents do not own real property—they own personal property (shares of stock). The corporation owns the building and holds a single mortgage (blanket mortgage). Residents pay monthly maintenance that covers their share of the mortgage, property taxes, insurance, and building operations. Selling co-op shares typically requires board approval, giving co-op boards significant control over who can live in the building. Co-op shares are generally harder to finance than condominiums because lenders view them as personal property.
A buyer purchases 500 shares of stock in a housing cooperative corporation, entitling them to a proprietary lease on Unit 8B. The monthly maintenance of $1,500 covers the buyer's share of the building's blanket mortgage, property taxes, and maintenance. If the buyer wants to sell, the co-op board must approve the new buyer.
Co-op = shares of stock + proprietary lease (PERSONAL property). Condo = deed to airspace (REAL property). The co-op board can approve or reject buyers, unlike condos. The building has ONE mortgage; if other residents default, remaining residents must cover the shortfall. This shared risk is a key disadvantage.
Related Terms
Related Concepts
The bundle of rights describes the rights associated with property ownership, allowing owners to use, control, enjoy, exclude others from, and dispose of the property.
A freehold estate represents ownership of real property with an indefinite duration.
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
A life estate is a freehold estate that grants ownership rights for the duration of someone's life.
Riparian rights concern properties bordering flowing bodies of water (rivers, streams), while littoral rights concern properties bordering non-flowing bodies of water (lakes, oceans).
Frequently Asked Questions
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