If you’re like most people, you probably think a condo building and a co-op are the same thing. But, actually, the two are based on completely different principles. Here’s how to tell them apart.
A condo building is comprised of separate units that are owned by different individuals. In a co-op, a corporation owns the building, and instead of buying the unit itself, you’re technically buying shares in the corporation. These shares entitle you to a lease of your apartment in the co-op. Despite this different structure, co-op participants get the same favorable tax treatment as condo owners.
Typically, co-ops are harder to get into than condo buildings. A condo building’s board doesn’t have to approve new buyers as they come in, but a co-op board may vote on whether to allow someone to buy into the corporation.
While various arrangements exist, co-op buildings tend to have a higher owner occupancy rate than condo buildings. While condo building associations may outline a maximum number of units that can be rented out, co-ops frequently go a step further and require owners to occupy their space. This ties back into the investor mindset of a co-op, versus the more independent nature of condo ownership.
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