Difference Between a Condominium and a Cooperative "Coop"
Which Type of Property Ownership is Right for you?   

Buyers Purchasing Property in New York there are two main types of ownership choices:
Condominiums (Condo)
Cooperatives (Co-op)

There are advantages and disadvantages to each, but in the end it’s a matter of individual preference and financial goals. 

Condominiums

In a condominium, a purchaser owns deed to the real property and each owner is responsible for a percentage of the common areas, amenities and building. Since ownership is direct, owners are responsible for their own property tax.  Each Condominium elects a “Board” comprised of Unit Owners whose purpose is to make decisions on behalf of all the owners. The Board also hires a Management which is responsible for the overall health of the building and process rentals and sale of units in the building in exchange for a fee.  Due to the ownership nature of Condominiums, they are the top choice if you an investor, foreign buyer or parents purchasing for their children. 

Advantages & Disadvantages  

• Easier approval process:  
  - Condominiums normally have fewer requirements on income and have a lower minimum down payment usually around 10%.  

• Right of First Refusal: 
  - This is one of the most important advantages for owning, buying and selling a Condominium because in the event the Condominium Board denies and refuses a transaction they must, at the same terms of the contract with the prospective buyer or tenant, buy or rent an apartment from the owner.  Since this option is very expensive it is rarely exercised and it allows the owner to sell, rent and use their property as they see fit.  
• Lower Monthly Common Charges, Common Elements and Services: 
  - Condos usually are slightly less expensive to maintain over time. Owners of condominiums pay for the common elements (ie: management, staff, doormen, plumbing, roofing, common walls, etc.) in the form of common charges, and they pay their taxes separately. Owners also have more control over building maintenance and development issues. Lastly, Owners have fewer restrictions in renovation and combining multiple units.  
• Neighbors: 
  -Because of fewer restrictions, neighbor composition may become less similar in nature and may have transient feeling.
• Settlement Costs: 
  - The closing costs to obtain a mortgage for a condominium are very expensive in relation to settlement costs to finance coops. The major differences are the inclusion of mortgage recording tax, title insurance and tax escrow when obtaining a mortgage for a condo, as these items are not required to close on a cooperative apartment loan.
• Availability & Cost: 
  - Typically More Expensive Per Square Feet and there are Fewer Condos vs. other types of real estate properties in New York

Cooperative Apartments

A Cooperative or Co-op is apartment building that is owned as a corporation which owns title to the real estate property.  When purchasing a Co-op you becoming a stockholder in the corporation and are entitled shares to a “proprietary lease” which allow you to occupy a certain apartment under specific restrictions. The larger apartment, the more shares of the corporation you will own. Co-op Share holders also pay a monthly maintenance fees for any underlying mortgage in the building, property taxes, insurance and building maintenance costs.  A Co-op elects a “Board of Directors” comprised of shareholders whose purpose is to make decisions on behalf of the corporation. The Board of Directors also have the authority to approve any purchases and determine financial requirements and how much financing is allowed. 

Coop Financial Considerations

If you are considering purchasing a co-op, please keep in mind that most co-ops require that you finance 75% or less of the purchase price and that you have substantial liquid assets after the closing. Thus, as a very general rule of thumb, in order to purchase a co-op, most co-op boards will require that you have liquid assets of at least one-third of the purchase price, irrespective of the amount for which you may be pre-qualified for a mortgage.  So, if you are considering purchasing a $1,000,000 co-op, you should have at least $350,000 in liquid assets and be prepared to put down $250,000 in cash.  In addition, purchasers must have at most a debt to income ratio of 25-28% after mortgage and any other living costs.  Most boards will not consider buyers that just barely meet the building's financing requirements and whose liquid assets will be virtually depleted after the closing. Though there are co-ops that are less stringent, the majority are entirely non-flexible in this respect.

ADVANTAGES/DISADVANTAGES

• Typically lower purchasing price on per sq. ft. basis
  -Since there are more Coops than Condos, Coops will be cheaper and more choices
• Less legal and financial responsibility for building maintenance and development 
  -Most obligations are taken over by the “Board of Directors”
• Generally higher tax deductibles & higher monthly maintenance fees
  - Portions of the maintenance are tax deductible and can account for significant reductions in the maintenance payments on an annual basis
• More complicated approval processes
  Purchasing Restrictions 
  - Approval to purchase shares of a co-op must be granted by a board of directors, who also have the authority to determine how much of the purchase price may be financed and minimum cash requirements. The board will also require an interview so they can meet you and ask any questions regarding the information you provided. They can approve or deny any applicant as they choose.
• Transfer Restrictions
  - Some Coops have restrictions when bequeathing shares or allowing relatives or family use of the property unless the owner is present.
• Subleasing restrictions
  -Purchasing a co-op can be intricate, and subletting can be difficult. Each co-op has its own rules and should be considered carefully.
• Less flexibility with apartment construction and renovation
  -The board of directors will have to give final approval on any construction or renovation

 Closing Costs for Condominiums & Coop  

Importance of Condominium and Co-op Insurance

Condominium and Co-op insurance covers your possessions against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and water damage from plumbing. However, no homeowner insurance covers floods, earthquakes or routine wear and tear. You can, however, buy separate policies for flood and earthquake damage. If you are forced out of your home because of a disaster , your loss of use is covered.  You may be reimbursed for the extra cost of living somewhere else while the condo or coop is being restored after a covered disaster.  

Condo and Co-op insurance pays the reasonable additional costs of temporarily living away from your home if you can't live in it due to a fire, severe storm or other insured disaster. It covers hotel bills, temporary rentals, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differs from company to company. 

Family Liability provides coverage for you or someone in your family who lives with at the insured condo or co-op if they are at fault for injuring a person or damaging his or her property.  If you are sued as being at fault, this coverage also pays your legal fees.. 

Guest Medical covers the cost for accidental injuries caused to visitors while on the property, such as a guest slipping.  If a visitor should slip and fall, injuring themself badly, he or she could sue you.

Building Property Replacement Cost provides full replacement on most of your insured personal property like built-in bookshelves, cabinets, paneling and wall-to-wall carpeting. 

*Bona Tierra New York Corp is a licensed real estate broker in the state of New York and is for Equal Housing Opportunity. All material presented herein is intended for information purposes only. All information furnished regarding property for sale, rent or financing is from sources deemed reliable, but no warranty or representation is made as to the accuracy thereof and same is submitted subject to errors, omissions, change of price, rental or other condition, prior sale, lease or financing, or withdrawal without notice. All square footage are approximate unless otherwise indicated and information, including, but not limited to dimensions, photographs, room count, number of bedrooms and the school district in property listings are deemed reliable but should be verified by your own attorney, architect, or zoning expert. As a precondition to your accepting and sharing this listing you agree not to advertise it at anytime without prior written permission.