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What is the difference between a condo and a co-op?

You can't tell whether a property is a condo or a co-op by looking at it. Both condos and co-ops can be old or new... and both are 'apartment units' in a shared building with common spaces and shared amenities. However, the forms of ownership are completely different.

condo-coop600

When you buy a condo you are buying a piece of real estate.

For legal purposes it is the same as owning a house. If you finance your purchase it is secured by a real estate mortgage.

  • You own the 'air space' of your unit... you own real estate property, just as you would a private house
  • You also own an undivided percentage of the common elements and amenities of the building along with the other unit owners
  • It is governed by an association of the unit members who elect a board of directors to oversee maintenance and enforcement of rules and regulations
  • You pay monthly association fees determined by the association which include things such as: building exterior and common area maintenance, hazard insurance for the building and common areas, heating, professional management, sanitation, security system, shared amenities such as party room/pool/exercise equipment, snow/lawn care, water/sewer

When you buy a co-op you are buying shares in a corporate entity whose assets include the building in which you will live.

Typically you enter into another agreement giving you the right to occupy 'your' unit  as long as you pay your monthly assessments. Because you don't own any real estate, financing is through special co-op financing rather than a traditional mortgage.

  • You don't own your unit
  • You own shares in a corporate entity that owns your building with the contractual right to occupy your assigned unit
  • Your initial purchase price may be less than for a condo of comparable size but monthly fees may be higher; co-ops may limit the amount that shares for a unit may appreciate in value when it is sold
  • Your monthly association fees are typically higher than those for a condo because it may also include an underlying mortgage for the property held by the corporation as well as more common property and maintenance; for example, the corporation may own all the appliances in the units which they maintain or replace as needed
  • It is governed by a board of directors, who frequently must approve any sale... you  may even have to meet the other cooperative owners and be approved by them before buying into the co-op

In the Twin Cities area, senior co-ops for age 55+ are the most common form of cooperative living. It is fairly common for sales of these senior co-ops to be handled by the complex itself, so there may be more co-op units available for sale than are listed in the MLS.

 

 

 

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©2016 SHARLENE HENSRUD, REALTOR licensed in Minnesota - 612.419.0560 - shensrud@homesmsp.com

RE/MAX Results - Minneapolis/St. Paul, Minnesota - 800.875.6001

Awarded Super Real Estate Agent by Mpls/St Paul Magazine for outstanding customer satisfaction

A portion of every transaction donated to HABITAT FOR HUMANITY

HomesMSP.com provides real estate information for Baby Boomers, first-time homebuyers, relocation buyers, and move-up buyers in the Twin Cities metropolitan area of Minneapolis and St. Paul, Minnesota. We also offer resources and services for Baby Boomers moving to Minneapolis - St. Paul Twin Cities Minnesota and people age 55+ in third age transitions and retirement housing transitions, guiding home buyers and sellers through the process of selling and buying a house, townhouse, townhome, condo or coop at any stage in life. Sign up for a free weekly newsletter, get free Twin Cities relocation guides and free homebuyer handbooks. Whether you spell it ‘Realtor’, ‘Relator’, ‘Realator’, ‘Realitor’, ‘Realter’ ‘Realty’, ‘Reality’ or ‘Real Estate’, we’re here to answer your questions and help guide you through the process of buying or selling a home or relocating to the Twin Cities of Minneapolis and St. Paul, MN.