Financial Answer Center

The cooperative form of ownership (the co-op) is generally found only in large cities. Buying a co-op is quite different from buying a condominium. When you buy a condo, you are actually buying tangible real property. With a co-op, you buy shares in a corporation that owns the building in which your apartment is located. The number of shares you own is proportional to the amount of square footage your unit occupies in the building.

There is only one mortgage and one tax bill and each unit is billed based on the number of shares allocated to it. If you are buying a co-op, the items you need to consider are the same as if you were buying a condo, but pay closer attention to restrictions which may be placed on your ability to renovate or expand your unit or sell it in the future.

Co-op restrictions on who may buy a unit are attractive while you are resident in that co-op, but could become a big headache for you when you try to sell your interest, especially if time is important, such as with a relocation.