A housing cooperative is a multi-unit apartment building run by a cooperative association which usually consists of all the unit owners. The association owns the entire building, including the individual unit; unlike a condominium, where the owner owns the entire apartment. Aside from this, condominiums and cooperatives vastly differ in the legal and financing aspects.
So, when you’ve chosen the building you want to purchase and already agreed with the seller on its price, secure a written contract for your purchase. The contract must state the various terms and conditions of the agreement between you and the seller. Included in the contract are the transfer date, the price and financing arrangements. Review the contract carefully before accepting it.
Unlike a condominium, purchasing a cooperative requires the approval of the membership committee. Possible rejection is grounded on two factors: lack of financial ability to live in the complex and unwillingness to comply with operating rules. Aside from this age, sex, race, religion or sexual reference are not valid reasons for rejection of ownership. Although some instances in the past occurred when buyers were rejected because the association feared their status would draw unnecessary attention to the building.
Unlike the mid-1980s where financing for cooperative apartment is scarce resulting to sellers slashing some of the purchase prices, buyers nowadays can avail of share loan financing.
Cooperative apartments are most popular in New York, Washington D.C., Chicago and Los Angeles. Despite claims that cooperative apartments are not good investments compared to condominiums, it has remained a competing force to condominium living as it fosters cooperation and participation among co-op members.
Whether you choose a condominium or a cooperative apartment, make sure to do your research before you get into a deal. After all, for anything to be a good investment how it is managed will greatly affect its value, so ask around before making that purchase.