Cooperative Ownership
Definition
In a cooperative (co-op), the building is owned by a corporation, and residents purchase shares of stock in the corporation that entitle them to a proprietary lease on a specific unit. Residents are shareholders, not property owners.
Example
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.
Exam Tip
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 Ownership Terms
Bundle of Rights
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.
Freehold Estate
A freehold estate represents ownership of real property with an indefinite duration.
Leasehold Estate
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
Life Estate
A life estate is a freehold estate that grants ownership rights for the duration of someone's life.
Water Rights: Riparian and Littoral
Riparian rights concern properties bordering flowing bodies of water (rivers, streams), while littoral rights concern properties bordering non-flowing bodies of water (lakes, oceans).
Real Property vs. Personal Property
Real property is immovable land and anything permanently attached to it, while personal property (also called chattels) is movable.
Frequently Asked Questions
Test Your Ownership Knowledge
Practice with exam-style questions to make sure you can apply Cooperative Ownership and other ownership concepts.