The Difference Between a Condo, Co-op and Condop

Confused? Read on

The difference between a condo, co-op and cond-op can be confusing if you are just starting your search to buy a New York City apartment. Many first time home buyers aren’t even aware of the difference until they notice the monthly charges on the listing are not consistent.

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Here is a quick and easy primer for any first time buyer to sort out the differences.

What is co-op?

Put simply, a co-op is an apartment building, which is owned by a corporation. Everyone who purchases in the building, receives a stock certificate in lieu of a deed and a proprietary lease, giving them the right to reside in the apartment they have purchased.

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The shares assigned to each individual apartment were done when the co-op was formed, and that number never changes. It dictates not only your monthly maintenance charges but also the portion of the real estate taxes you owe and any future assessments. Because the corporation owns the entire building, there is only one tax lot and therefore one tax bill. The portion of the? taxes you owe as an owner are included in the monthly maintenance charge.

What is a condop?

This is a bit of a confusing term. The Condop meaning actually has two different meanings and you will need to ask the listing broker what is intended if it is not clear in the listing description. The first is the strict legal definition where a portion of the building is a condo, but the residences are all co-ops. This typically happens in a mixed use building where the ground floor retail spaces are condos but the residences are all co-ops.

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However, Condo is also commonly used as a marketing term to let potential buyers know that the co-op building is run with condo rules. This designation is made so that the building appears more appealing. It may indicate that you can rent the apartment with no limitations. Yet at the end of the day if you are purchasing in a condop you are buying into a co-op structure so you will receive a stock certificate and proprietary lease and not a deal.

What is a Condo?

When you purchase a condo, you are purchasing real property. Every apartment owns the actual physical space which has its own tax lot. You also own a percentage of the common interest (hallways, lobby etc.) and the percentage is allocated to each apartment when the condo is formed and that almost never changes. You will get a deed at closing.

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The common charges will be reported separately from the real estate taxes when you are looking for condos online. As an owner, the common charges represent your portion of the bill for keeping the building running and you pay your own real estate tax bill.Now that you know a Condop is essentially a co-op for a buyer’s purposes let’s look at the difference between a co-op and condo. When evaluating purchasing a Co-op vs condo in New York City, may buyers focus on the very practical reasons to purchase a condominium:

• There are fewer hurdles to purchasing a condominium.Unlike a co-op your purchase application is not being scrutinized for approval of your finances. While you are required to submit a purchase application for a resale condominium it is largely to collect documents needed by the managing agent in accordance with their fiduciary duties to the building.
• Condominiums cannot refuse your purchase based on your finances, they only have the Right of First Refusal.This means that if they want to reject your purchase, the building is obligated to purchase the home from the owner for the same price you are offering to pay. When buying directly from a Sponsor as a first offering you are bypassing the need to submit a purchase application and there is no board to exercise a right of first refusal.
• Buying from a Sponsor or in a resale, you still have the option to rent out your home from the day you own it.In most buildings you should expect that you have the freedom to rent for an unlimited amount of time. You simply want to be aware of any restrictions imposed by the building regarding the length of your lease. Many but not all buildings require a minimum of twelve months for a rental period while others allow as few as six months.

Now that you know the differences you still might decide you do not want to consider purchasing a co-op in NYC but there are two reasons many buyers change their mind.

?The first is that co-ops typically trade at a lower price than a condo so you will get more space for your money. The second is that approximately 70% of the overall housing stock is comprised of co-ops, so eliminating them from your search dramatically reduces your choices.

Read more Boland Team Blog Posts.

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