Co-operative housing, commonly referred to as a co-op, is an alternative to traditional housing. Similar to condominiums and apartments, these “common interest” properties differ in their management and ownership models to offer some unique benefits.
Like with all living situations, co-ops come with a few drawbacks. It is up to home buyers to weigh the pros and cons of all their options to find the living situation that best suits their lifestyle.
The benefits of co-ops
When choosing a co-op, buyers do not purchase the actual property. They instead buy shares in a corporation with a board of directors. Becoming a shareholder allows an individual to lease a living space on the property, with the number of shares purchased determining the size of the living space.
Shareholders enjoy several other benefits as well. These properties are generally low maintenance with landscaping, painting, snow removal and more covered by paid costs. These properties also offer stability and community not found elsewhere, as every neighbor has financially invested in the property. Co-ops are well-suited to older couples who find maintaining a large house overly challenging.
The drawbacks of co-ops
These properties are not without their disadvantages, though. Co-op owners still must pay a monthly mortgage and a maintenance fee. Depending on the nature of the unit, incurred costs may total thousands of dollars a year. Though this money goes directly toward the maintenance of the property, some may balk at the associated fees.
The co-op board also restricts property development. Depending upon the layout, the board may limit or require approval for landscaping or decorating choices. Additionally, if one wishes to sell their shares or sublet their place, the bylaws may restrict who can lease property or purchase shares.
A tricky legal landscape
Co-op contracts can often be dense legal documents with lots of fine print. Before signing, potential buyers may want to consult with a local attorney familiar with real estate law. A lawyer may help families focus on what is right for them when choosing a living space.