Millions of people are looking for an alternative lifestyle or just simply want to ease themselves into retirement. Purchasing either a condominium or co-op allows people to enjoy property appreciation and some kind of tax relief, while someone else takes care of the grounds. While day-to-day life in a co-op or condominium is pretty much the same, there are important differences between the two, which you should be aware of to save yourself aggravation and possibly money.

Co-Op vs. Condo Ownership

The main difference between a condominium and a co-op is the condominium owner owns the apartment like any average homeowner. They also own an interest in the common areas such as recreation area, lobbies and parking lots. In a co-op apartment complex you do not actually own anything, instead, you own shares in the co-op association, which gives you the right to lease space in the building. The co-op owns and maintains all common areas. Basically, a co-op is considered intangible property and a condominium is considered actual property.

Co-Op vs. Condo Property Taxes

If you decide to buy a condo it will appear in the property tax rolls and you will have to pay tax separately. A co-op is owned by the association so the tax rolls show it as a single property. The taxes are paid by the association who pass the cost on the tenant. This is usually within the monthly maintenance fee.

Financing

There are two issues when considering financing a co-op. Firstly is the mortgage obtained to fund the original conversion to a co-op or original construction, this is passed along to the tenant in the monthly maintenance fee. Then there is the issue whether the tenant had enough money to buy into the building or had to loan the cash. Consequently, there are few lenders who will finance co-op owners. Individual owners of condos are responsible only for their taxes and mortgage.

Monthly Fees

Maintenance fees are used paid on either a quarterly or a monthly basis. A co-op’s fees are significantly higher compared to a condo because the co-op owners pay property tax, mortgage and insurance payments.

Board Powers

Board members have little say in the transfer of ownership when it comes to condo owners. Co- ops however, can deny or approve a sale; they can also block the sale to celebrities if they feel they will disturb other tenants.