Tara Jones
One of the most common questions people ask when exploring homeownership is: What’s the difference between owning a condo and owning a co-op?
When you buy a condominium, you’re buying real estate. You get a deed with your name on it, and you own that specific unit outright—just like owning a house, except it’s part of a larger building.
A cooperative, often referred to as a co-op, is different. Instead of owning real estate, you buy shares in the corporation that owns the building. In return, you get a stock certificate that shows how many shares you own, and you’re given a special lease, called a proprietary lease, that lets you live in your unit. Think of it as being both a resident and a shareholder in the building.
Selling or Transferring a Co-Op
Unlike a condo, you can’t just sell your co-op unit to anyone you choose. The co-op board—and sometimes the management company—must approve the buyer. They’ll review things like credit history and financial stability before giving the green light. That means selling a co-op comes with an extra step—and sometimes extra waiting.
Financing and Stock Certificates
If you take out a loan to buy your co-op, the lender usually holds onto your stock certificate until you sell or refinance. If you buy without financing, you’ll be given the original certificate yourself. It’s very important to keep this document safe, because it proves your ownership.
If the certificate is lost and no bank is holding it, the co-op may require you to buy an expensive insurance bond to protect against fraud before they’ll issue a replacement. There may also be hefty fees involved.
Why This Matters
Owning a condo is more straightforward: you get a deed, and you can usually sell to whomever you want. A co-op requires more steps, more paperwork, and careful safekeeping of your stock certificate. Losing that certificate can cost you a lot of money and create serious delays when you want to sell or refinance.
Bottom line: If you buy a co-op, guard your stock certificate like it’s gold. Keep it safe and accessible so that when it’s time to sell, you don’t end up with costly headaches.
Contact Anthony A. Nozzolillo, Esq. for a free consultation by calling 516-581-4713, emailing anthony@nozzolillo.com or online at nozzolillo.com.
