Key Differences Between a Cooperative and a Condominium
There are several material differences between residential buildings that are created as a Cooperative or as a Condominium. Those material differences are important to understand.
1. Ownership by Apartment Owner
- Cooperative is a corporation that issues shares and a Proprietary Lease allocated to each unit. An Owner is thus considered both an Owner and a Tenant with some of the same protections that a residential lease tenant has.
- Condominium is an unincorporated association and each owner receives a deed with its own block and lot number.
2. Applications to Sell or Lease
- Cooperative - sales and subleases of units are subject to Board of Directors’ approval which may require receipt of certain personal and financial information of prospective buyer or subtenant.
- Condominium - subject to “Right of First Refusal,” which means that the Board of Managers has the right to match the purchase price, or lease rental terms.
3. Business Control of Building
- Cooperative - business operations run by a Board of Directors which are usually elected annually. Board meeting minutes are usually kept of meetings and provided to Managing Agent.
- Condominium - business operations run by Board of Managers which are usually elected annually. Board meeting minutes usually kept of meetings and provided to Managing Agent.
4. Operating Documents
- Cooperative - key documents are Offering Plan with Amendments, Proprietary Lease, and By-Laws.
- Condominium - key documents are Offering Plan with Amendments, Declaration, and By-Laws.
5. Monthly Charges
- Cooperative - each owner monthly receives an invoice called “maintenance” which may include a pro-rata portion of the mortgage principal and interest paid on a building-wide mortgage, and real estate taxes paid on the entire building.
- Condominium- each owner monthly receives a “carrying charge” plus certain other charges referred to as “assessments” which can be utilities or other building-wide special expenditures pro-rata to each unit.