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
Real Property vs. Personal Property
Real property is immovable land and anything permanently attached to it, while personal property (also called chattels) is movable.
Joint Tenancy
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
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
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
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.
Condominium Ownership
Condominium ownership involves owning a unit of airspace within a multi-unit building plus an undivided interest in the common elements shared with other unit owners. Each unit is separately taxed and financed.
Frequently Asked Questions
Test Your Ownership Knowledge
Practice with exam-style questions to make sure you can apply Cooperative Ownership and other ownership concepts.