A co-op, short for cooperative housing, is a type of residential housing option that is actually a corporation whereby the owners do not own their units outright. Instead, each resident is a shareholder in the corporation based in part on the relative size of the unit that they live in. When you buy into a co-op, you’re not purchasing a piece of property – rather, you’re personally buying shares in a nonprofit corporation that allows you to live in the residence. Co-op housing is typically found in large buildings with multiple units, and most co-op homes in America resemble apartments. Key features of a co-op include:
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Ownership: Co-op home owners buy stock in the housing complex, and the ownership of that stock comes with a proprietary lease to their home.
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Renovations: Once they buy in, co-op owners are not allowed to make renovations without board approval. This doesn’t mean you can’t renovate; millions of co-op apartments have been renovated. It means there’s an approval process you must go through.
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Control: Co-op residents gain equity in the building by buying shares in that business, and they act as shareholders who control the business decisions of the corporation. This approach tends to protect the overall financial health of the entire building in contrast to condo ownership, where a resident’s stake is more focused on their own parcel of property.
Co-op housing can be less expensive than apartments since they operate on an at-cost basis, collecting money from shareholders to cover the buildings expenses.
