What is a co-op?

A co-op, short for cooperative, is a type of property ownership in which residents own shares in a corporation that owns the building or complex. The residents do not own the individual units; they own a share of the corporation that corresponds to their unit. They are also required to pay monthly fees, which cover the costs of maintaining the building and common areas, as well as any underlying mortgage on the property.

Co-ops are common in urban areas, particularly in older buildings that have been converted from rentals to co-ops. They are also often found in larger, multi-unit buildings.

Co-ops have a governing board, which is typically made up of resident-owners, and is responsible for making decisions about the building, such as approving new residents, setting monthly fees, and managing the maintenance of the property.

One of the main differences between a co-op and a traditional condo or townhouse is that the purchase process is different. When purchasing a co-op, the buyer must go through a rigorous application process, which includes an interview and a review of their financials. The co-op board must approve the buyer before the sale can be completed.

Co-ops also have some restrictions on renting out the units and can have stricter rules regarding modifications to the units.

Co-ops can be a good option for people looking for an affordable housing option in urban areas, but it's important to understand the differences between a co-op and other types of properties, and also the process of purchasing and living in a co-op before making a decision.

Co-ops may have additional requirements in terms of financing, so we recommend consulting with our licensed loan consultants throughout the co-op search and purchase process.