Condo vs Co-op - What's the Difference?
The type of home you choose can affect the types of changes you can (or cannot) make to your home, the number of rules and restrictions you must comply with, and the amount of money you'll need to pay in monthly fees. Here's how to keep these terms straight so you can understand the type of home you are considering buying without wading through heaps of legalese.
What you own:
Condo owners do not own the land or the exterior of the building, only the inside of the unit itself. Because only the interior of the unit is owned, you could potentially share walls with neighbors above, below and on both sides — although there are also freestanding condos. Any stairways, entries, gardens and common areas outside your unit are owned collectively by all unit owners.
Fees and rules:If you own a condo, you pay a monthly fee to a homeowner's association for maintenance of the property. Since you do not own the building, you may not choose paint colors for or make changes to the exterior or common areas, but you are free to do whatever you want to customize the interior of your home.
What you own:
In a housing co-op, you are actually purchasing stock in a privately held corporation — the corporation owns the building, and your share buys you the right to lease an apartment from the company where you are part owner. Unlike condos, townhouses or TICs (described next), a co-op is actually considered personal property rather than real property.
Fees and rules:
The co-op board vets all potential new member owners, and boards are notoriously picky — you will need to submit a great deal of information and sit through an interview. Once in (if you are selected), you will be required to comply with all of the board's rules, which can include anything from paint colors to noise — and the rules can change at any time. You must also pay monthly fees to the co-op board.