If you are looking to buy property, you likely came across cooperative units and condominium units. Both of them are ownership interests in a portion of a building, so you, as a partial owner, would be responsible for paying for your portion of the building’s maintenance. However, there are a number of differences between the two property types.
When you buy into a cooperative, you are buying into a corporation which owns the building and simultaneous entering into a long term lease for your unit known as a proprietary lease. There is a board of directors for the corporation, known as the cooperative board, which is elected by all of the unit owners and acts as the cooperative’s landlord. The landlord-tenant relationship of the cooperative board and unit owners provides the cooperative board with a substantial amount of rights over what unit owners can and cannot do to their respective units. There are typically restrictions on the ability to have pets in the building, perform alterations to the unit and sublet the unit. In the event a unit owner defaults under the proprietary lease, the cooperative board can seek to terminate the proprietary lease and evict the unit owner from the unit. In addition, the board also has a very broad right to approve or disapprove a unit owner’s proposed purchaser if and when a unit owner decides to sell. So it’s important that the unit owner is aware of who is on the board.
With condominiums, you are actually buying the unit that you live in. There is a board of managers elected by the condominiums owners, however their rights are limited compared to cooperative boards. There are rules and regulations that the condominium board may implement, however these tend to be limited in nature. In addition, the condominium boards cannot evict individual unit owners from their units, though they can impose fines on unit owners and place a lien on a particular unit should the fines accumulate and/or remain unpaid. Condominium boards also have a right to purchase any unit that comes up for sale, however it is not commonly exercised.
Generally speaking, cooperatives tend to be lower in price than condominiums. However, cooperatives are advantageous to those seeking to live in a particular community that operates with a particular set of rules. Should you prefer more flexibility and less restrictions, condominiums may be preferable.