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
Real property is immovable land and anything permanently attached to it, while personal property (also called chattels) is movable.
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
Tenancy in common is a form of co-ownership in which two or more persons hold separate, undivided interests in property without the right of survivorship. Each owner can hold unequal shares and can independently transfer their interest.
Tenancy by the entirety is a form of co-ownership available only to married couples that includes the right of survivorship and protection from individual creditors. Neither spouse can unilaterally sell or encumber the property.
Community property is a form of ownership recognized in certain states where property acquired during marriage is considered equally owned by both spouses, regardless of who earned the money or whose name is on the title.
Frequently Asked Questions
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