Condo(minium) or Coop(erative)?

Although a Condo (“condominium”) and Co-op (“cooperative”) seem to be one in the same, the ownership structure, financing options, prices, taxes, fees, and oversight entity are significantly different. On the basis, they are structurally similar, both oftentimes buildings with shared spaces. Nor is either one more desirable than the other exclusively, but many owners and potential homebuyers do find themselves preferring one over the other.

Condos offer outright ownership, whereas co-ops sell fractional ownership through “shares”, much like a corporate structure. In a co-op, each “share” designates the right for occupancy and use of a specified unit at the building. Condos provide you exclusive ownership of your specific unit. Regarding homeowners insurance, a condo would cover defects of the unit, whereas a co-op would cover the contents within the walls only (similar to a renters policy). 

Financing Your Florida Condo or Co-Op

Financing condos or co-ops are more challenging than a single family home, in most cases, however many condos do qualify as HUD-approved condos granting potential buyers the option to finance through an FHA (Fair Housing Association) mortgage. Because condo units are separately owned they can be secured with a trust deed or mortgage, whereas co-ops can not. 

Co-ops are often more stringent, but in some cases certain banks will lend for qualified buildings on the institution’s ‘approved list’. However more stringent rules, such as cash only purchases, are common, so if you are seeking a co-op, but require financing, it is essential to ensure it is possible. Furthermore, Co-op boards initial interviews can be far more selective, and require personal information, such as personal tax returns and balance sheets, even if you have the cash to purchase outright. 

Renting Your Condo or Co-Op

Renting your unit, for short or long term rentals, in either a condo or Co-op can be a challenge. Many Co-ops do not allow any rentals at any time, with only the owners, and sometimes family, allowed to use the unit. Condos can fluctuate greatly by homeowners association (HOA), but always ensure if you plan to be a landlord of your new property AirBNB or rental that it is allowed in the bylaws. 

Many condominiums do allow rentals, but oftentimes will allow a maximum of one per year, and require board approval of the tenant. 

It is essential you dig into the bylaws of any Co-op or Condo before committing to a purchase if you have any intentions of leasing your unit. 

Committees, Fees and Resale

Condos have HOAs (Homeowners Associations), whereas Co-ops have committees. Co-op committees have far more power and say, which can have both positive and negative impacts. 

Condos are far more independent properties, being that each is assessed for tax independently, whereas a co-op is assessed as a whole, and the co-op committee then asses the taxes to each individual ‘shareholder’. 

Resale can be a challenge. Ownership of a condo allows you to sell at any price, but HOA approval is still required of the individual. However Co-op committees have the right to reject a sale based on the finances of the buyer, even if they have the cash to buy, or can reject a sale solely off the buyer's offer. Because no individual owns the unit itself, it is the committee itself that defines a ‘reasonable’ price for sale, and has the power to block a sale on these grounds.

Ownership in a Co-op will absolutely require you to get to know your neighbors better, and truly emulate a ‘cooperative’ experience. Because of this, often second-home, international and investment buyers are excluded from purchasing. Although Fair Housing Laws do ensure outright descrimination is outlawed, it can be great, if your neighbors are of a similar lifestyle, to hand select buyers that have a similar lifestyle to those in the building. Further, with an extensive vetting of all buyers it can ensure the building has funds for repair and maintenance, and blocking of low priced sales can ensure your property retains its values for years to come. 

Although condos and co-ops have many differences, one thing they do have in common is that you will not retain full control over your space. If you strive to have autonomy with your own land and walls it is highly recommended you look to purchasing single family homes exclusively.

I am committed to serving all of my clients and neighbors with the information they need to make the right purchasing decision. If you're in the market to buy or sell I will be on your side, ensuring you understand your investment before purchasing.

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