By Colin R. O'Leary
November 16th, 2018
What are the key differences between a condo and a co-op? They might look the same on the outside, but the legal structure is what holds the key differences.
1. When you own a condo, you own the actual physical space of the apartment, and shared use to any common spaces in the building.
2. When you own a co-op, you are buying shares or stock in the building. You will get issued a number of shares in regards to the size of the apartment. The more apartments you own in a building, the more overall shares and control you will hold in a co-op building.
3. With co-ops, you usually have to go through an extensive co-op board approval process. Co-op buildings usually have a much more in-depth background check compared to condo buildings when screening new purchasers. With condos, there is no board approval, fewer documents are required, and closing tend to happen much faster.
4. Condos are more investor-friendly compared to co-op buildings. Condos can be rented immediately upon purchase, for an unlimited period of time. Condos have long been an attractive option for buyers who don't plan to live there and are purchasing strictly as an investment.
5. Co-op buildings are much more restrictive owners or shareholders towards renting the unit. Some co-op buildings do not allow subletting at all, while others have more flexible policies. Some co-op buildings will allow the owner to rent the space, but its usually for a limited time period. Others have more flexible policies. Some co-op properties allow the owner to purchase as a Pied-à-terre, or second home, while others do not.
6. With co-op buildings, the properties management and financial decisions are made by the co-op board members. The co-op board members are voted in by the shareholders of the building. Condos are controlled by a HOA or Homeowners Association.
7. Condos are usually more expensive to purchase here in NYC, but they usually have lower monthly fee's in regards to taxes and maintenance, compared to co-ops.
8. In most condo buildings, you will pay the monthly maintenance fee's and taxes separate. With co-ops, you will pay one monthly common charge that covers all expenses including taxes and the maintenance of the building.
9. In New York City, there is a much larger percentage of co-op buildings compared to condo buildings, though the gap is closing because the majority of the new construction over the last two decades has been condos.
10. Co-ops in New York City typically require a minimum of 20% down payment upon contract signing, while lending is much more flexible with condos in regards to the initial down payment.