Co-ops Vs. Condos

Condos
In a condominium, a purchaser owns the apartment plus a percentage of the common areas of the building. The purchaser takes title by deed, which is recorded in the county clerk's office. If you intend to obtain a loan to purchase the apartment, you will sign a mortgage, which will be recorded in the county clerk's office. In a condominium there is an association that you belong to once you purchase the apartment. The association provides services such as general maintenance to the common areas in exchange for a monthly fee. Because it is real property you will pay your property taxes separately or inclusive with your mortgage payments. Because a condo is real property the closing costs are higher than those of co-ops. Whether you own a co-op, or a condo, you may have to pay assessments for any major repairs or renovations.

ADVANTAGES
  • Easier approval process

  • Own actual real estate giving you more rights to it, i.e. you can transfer deed to family members, sublet or re-sell easier, etc.

  • More control over building maintenance and development issues

  • Lower monthly common charges

DISADVANTAGES
  • Typically higher purchasing price on per sq. ft. basis

  • More legal responsibilities for the entire living facility

Co-ops
A co-op is a short term for a residential property owned and managed by a corporation. When you buy an apartment in a co-op you are purchasing shares in a corporation, as opposed to purchasing actual real estate. The shares you purchase allow you the exclusive right to live in a given unit to which those shares are assigned. A co-op usually has an underlying mortgage that your co-op fee pays all or part of the payments to as well as other costs for the building. This is generally the reason why the co-op maintenance fees can be higher than that of a condo's. Portions of the mortgage payment and property tax are usually tax deductible and can account for a significant reductions in the maintenance payments on an annual basis.

ADVANTAGES
  • Typically lower purchasing price on per sq. ft. basis

  • Less legal and financial responsibility for building maintenance and development

  • Generally higher tax deductibles

DISADVANTAGES
  • More complicated approval processes

  • Generally higher monthly maintenance fees

  • There may be re-sell and subleasing restrictions

  • Less flexibility with apartment construction and renovation
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