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  • Steven Maffei

The Difference Between Coops and Condos

So you have decided to buy an apartment. You check the listings and you find various Coops and Condos for sale. You see that the sale prices and monthly charges are much different for the two even though the apartments are of similar size and in the same area. That is because there is a difference between Coops and Condos and you need to understand what they are before you make an offer to purchase.

What is a Coop?

When you buy a Coop, you are not buying real estate. You are buying shares of stock of a corporation. A Cooperative Housing Corporation is formed when a corporation is created and the corporation takes title to the building. A number of corporate shares is allocated to each apartment usually based on its square footage. When you purchase the stock, you also receive a lease to occupy the apartment you are buying, known as a proprietary lease, and you have the right to use the common areas such as the entrances, hallways and elevators. The stockholders are known as tenant shareholders.

What is a Condominium?

When you purchase a Condominium, you are purchasing real estate. You receive a deed, pay real estate taxes, utilities and other expenses as you would if you purchased a traditional one family home. You own your apartment and a percentage of the common areas of the building.

How are Coops and Condos Managed?

Both Cooperative Housing Corporations and Condominiums have Boards of Directors that are elected by the tenant shareholders and owners respectively. The Boards are in charge of running the buildings. They can do things like hire people who work for the building such as property managers and pass by-laws and house rules which control the behavior of the occupants of the building.

A Coop Board has a greater amount of power and control than a Condo Board because they are running the corporation which owns the building of which you only own a fraction of shares. The Board has broad authority to set rules which control the use of your apartment such as prohibiting placing an umbrella outside your apartment in the hallway, what color you can paint your front door, or whether you can sublet your apartment.

A Condominium Board has little control over what the owners actually do with their property. The Board basically manages the common areas. A red flag should be raised if you have a Condo with very restrictive rules for the owners.


Both Coops and Condos require you to pay a monthly fee with respect to the building’s operation. The type and amount of the fee required are vastly different between a Coop and a Condo.

Coop Fees

In a Coop, the tenant shareholders do not pay their individual living expenses. Instead, all of the operating expenses of the building are divided among the tenant shareholders. There is only one electric bill, one heat bill, one bill for liability insurance, etc. The tenant shareholders then divide all of the total expenses among themselves.

How is your contribution computed? The Board determines the total operating costs of the building and how much of a cash reserve they should hold in case of an emergency. The Board assigns an amount per share to cover that figure. Each tenant shareholder then pays his or her share based on the number of shares he or she owns. This payment is collected every month and is called maintenance. For example, if the Board determines that the Coop needs $12,000.00 per month to operate the building and there are 500 shares in the corporation, then the cost per share is $12,000.00/500 or $24 per share. If you own 40 shares, your cost of the expenses is 40 times $24 which is $960.00 per month. NOTE: If a tenant shareholder defaults on paying his or her share of the maintenance, then the other tenant shareholders will eventually have to pay those expenses along with their maintenance if it cannot be collected from the delinquent tenant shareholder.

In addition, the Board may collect additional funds from tenant shareholders know as assessments to cover special projects such as replacing the roof or replenishing a cash reserve.

If the building’s finances are mismanaged or expenses cannot currently be covered, your monthly maintenance will have to be raised. A higher monthly maintenance payment generally lowers the price of the apartment because buyers do not want to pay a high price to purchase an apartment that comes with a big monthly expense.

Condo fees

Condominium fees are generally lower than a Coop’s maintenance for a similar apartment because they only should be covering maintenance and care of the common areas for things such as landscaping, snow removal, and for the association as a whole such as liability insurance.

Board Approval


For you to be able to purchase a Coop, you have to be approved by the Coop Board. The Board has an interest in the purchaser’s financial ability to make maintenance payments because the building’s expenses are shared. You will have to fill out an application and submit financial records such as tax returns and pay stubs as proof of your financial solvency. You will have to appear for an interview where the Board will question you.


The process to purchase a Condo is much simpler. A Condo application is usually much simpler because a Condo Board cannot reject you. For the most part, they may just have you acknowledge that you have reviewed the rules of the Condo Association and agree to pay the monthly charges.

Although a Condo Board cannot prevent you from purchasing the apartment, in most cases they can exercise a right of first refusal. This means that the Condo Association has the right to purchase the apartment for the price it was offered to you. This rarely happens because the association has to come up with the purchase price. This provision is generally just used as a safeguard to ensure that the apartment is not offered at a below-market rate.


There are certain documents you must review prior to entering into a contract of sale. Both Coops and Condos have Offering Plans, By-Laws, House Rules, and Financial Statements. The Offering Plan is filed with the New York State Attorney General and describes all aspects of the Coop or Condo project. The By-Laws set up the procedural requirements for how the respective association is governed. House rules dictate the conduct of the building residents. Coops and Condos also prepare financial statements. A Coop has to have its books and records audited on an annual basis. Although a Condo is not required to be audited, financial records should be kept. It is crucial that you have an experienced professional review all of these documents before you sign a contract of sale.

A Coop tends to be a tighter knit community with mostly tenant shareholders living in the building. A Condo is usually a looser association with fewer rules.

There is no right or wrong choice to make. However, you should always be certain that a property is well managed and in good financial condition for its type.

The preceding is for factual information only and is not intended to be legal advice. You should never attempt to address any of the issues raised here without the assistance of an attorney.

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