Cooperatives (Co-ops, Senior Coops)

Coop-park1 Although many housing cooperatives (co-ops) look much the same as condominiums, they are a different form of ownership even though both are usually managed by an elected board of directors. With a condo you own your unit just as you would a house, and all the unit owners jointly own the common areas. 

In a housing cooperative you don't own any real estate… you own a share in a corporation composed of residents who own and operate the property. Your share gives you the right to live in a certain unit, essentially a lease. The corporation may have an underlying mortgage for the entire property and each unit pays a monthly fee based on square footage that includes a share of the mortgage, real estate tax, insurance, utilities and maintenance costs.

The 'share price' is the purchase price, which is sometimes referred to as a one-time membership fee. Because you don't actually hold title to a piece of real estate, traditional mortgage financing isn't usually available for this kind of purchase but more specialized financing may be available. In Minnesota, the unit 'share cost' is typically less than for a comparable condo, but the monthly fees are higher because in addition to utilities and maintenance costs they also often include a mortgage and real estate taxes.

Forms of cooperative ownership interest include both 'limited equity' and 'market rate', dictated by the corporation. 'Limited equity' coops limit the amount of profit or gain when a unit is sold, with the intent of maintaining affordable housing. This is most common in senior and limited income coops. With 'market rate' coops the share price follows the open market and shareholders can sell at whatever price the market will bear when they move out. The cooperative often has the right of first refusal to purchase when a share is sold.

Cooperatives exist in different forms throughout the world, and in New York City most apartments are held through cooperative corporations. Some college neighborhoods also have house coops where fee-paying members have the right to occupy a bedroom and share the resources of the house.

In Minnesota, the most common form of cooperative housing is limited equity Senior Cooperatives for people 55+ years of age. In fact, 7500 York built in Edina in 1978 was the first senior housing cooperative in the United States. Although some units are listed for sale in the MLS many are sold directly by the Senior Coops themselves.

Coop-summerhill1An example of a limited equity senior coop is a 1-bedroom unit currently listed in the Twin Cities MLS. Built in 2003, it has 1,190 square feet and is priced at only $54,638. Monthly fees including mortgage, taxes, and carrying charges are $1,154.

Services covered by the monthly carrying charges are more similar to that of an apartment, including…

  • All appliances, their repair and/or replacement
  • Carpet replacement
  • Painting
  • All utilities except telephone and Internet, including basic cable TV
  • Garbage and recycling
  • Water and sewer
  • Lawn care and snow removal
  • Individually controlled heat zone and air conditioning in unit
  • Annual furnace inspection and filter change
  • Annual window washing
  • Security, on-site staff
  • Reserves for future repairs/replacements
  • Extended insurance coverage
  • Care of unit by staff in your absence

Senior coops also often have group activities and/or amenities such as optional meals, programs and events, guest suites, beauty/barber shop, workshop, exercise center, gardens.

Sharlene Hensrud, RE/MAX Results – EmailHomesMSP.com

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