While, to some, the word “cooperative” may denote hippie housing or “communes,” over the decades they have evolved into so much more.
According to the NYC Department of Finance, there are over 2,508 co-ops in Manhattan alone, and over 30,000 registered across the nation.
Cooperative housing comes in all shapes and sizes, with some ranging from as few as 4 units to over 100. But, one thing that they all share in common is that they are all situated in multi-unit apartment buildings, where each resident has an interest in the entire building.
In other words, the occupant of an apartment is usually a shareholder in the corporate entity that owns the entire structure, including all of the individual units.
In a co-op context, the shareholder does not “own” a specific unit, (like one does with a condo), but rather, shareholders are assigned the right to exclusive use of delineated space. This means, that unlike condos, co-op shares are not considered interests in real property. The shares don’t tie the owner to a specific unit in the building, an accompanying lease does.
All management and financial decisions are carried out by the co-op unit members, through voting at regularly scheduled meetings, and/or, by an elected board of directors that handles day-to-day operations.
Some of the benefits of choosing to live in a co-op versus a condominium is that it’s typically more affordable and has lower “closing,” or acquisition, costs than a condo.
And, even though the shareholders don’t directly own any real property, they still get many of the tax deductions available to homeowners, including real-estate taxes and mortgage-interest deductions. Moreover, all common area maintenance and utility fees are shared by all the shareholders, lowering costs even further.
If you need assistance with purchasing a cooperative, condominium, or other real-estate (whether commercial or residential), please don’t hesitate to call any of our real-estate attorneys at 212-619-5400.