Co-op vs. Condo: What’s the Difference?

New York City buyers have a lot more to consider than just how many bedrooms and bathrooms they may need. They also must decide on what type of building they want to live in. For most New Yorkers, that means either a condo or a co-op. But what’s the difference?

We’ve provided defining characteristics of the two most popular types of home purchases to help you understand each.

Co-ops: The formal name for these buildings are cooperatives and they are jointly owned by all of the tenants living in the building. Therefore they are not real property. The tenants are considered shareholders of the property as opposed to owning the individual property outright. Co-ops do not allow investors, require a minimum of 20% down payment and typically have strict policies regarding subletting. Co-ops are run by a Board of Directors that serves as the decision makers when it comes to accepting a new shareholder. You will generally be interviewed by the Board of Directors and will be required to provide extensive paperwork detailing your finances. Co-ops are typically 25% less expensive per square foot than condos are and you do not pay real estate taxes because you do not own the property. Maintenance can be higher however to offset other costs. As a cooperative, the shareholders, aka, tenants, have a vested interest in keeping the building in excellent condition.

Condos: Condominiums are real property, meaning you will be the sole owner of the home and hold the title to it. Since this is real property, there is a separate tax for each apartment and each individual buyer pays his or her real estate taxes on their property. Compared to co-ops, financing is more flexible and buyers can generally finance up to 10% of the purchase price. Condos are also considered a good investment because they allow for subleasing. There are fewer condos on the market than co-ops, so competition for inventory is higher. Condo prices are also typically higher than co-op but do have monthly common charges and real estate taxes to consider.

Thinking about buying a condo or co-op? Contact Laurie Benazic at laurieb@bondnewyork.com.