How is buying a cooperative housing unit different than normal units?

JoeIQ: How is buying a cooperative housing unit different than normal units?
I own a duplex but was thinking about buying a larger place. There are some for sale that are cooperative housing. What does that mean? I know taxes are lower.

Do the tenants own the place? If I buy it, do I have to live there? What is different about cooperative housing for a buyer?

Answers and Views:

Answer by njyogibear
with a co-op you are owning a share of the company that owns the property. the maintenance fee tends to be higher than on condos, and they might have rules against renting out your unit.

Answer by Bryan Dasilva
cooperative= a time share. it’s like your own little investment!

Answer by ibu guru
Coops are not condos. With condos, you own the unit as your private property, subject to the rules of the CCRs (covenants and restrictions). Other owners have nothing to say about who can purchase the property, only insist that common charges be paid on time, uniform exterior appearance, usually some restrictions on the percentage of units which can be rented out by their owners.

Coops really aren’t private property in the same sense. Anyone buying into cooperative association must be approved for membership by the board. More restrictions. Difficult to resell and reduced resale value.

For both, your budget is held at the point of a gun in others’ hands. Special assessments are common. Common charges can spike dramatically. Boards often spend reserves (e.g. I know a number of complexes which spent reserves for roof replacement, etc, on swimming pools, then had to issue emergency assessments in the $ 5k-10k range for essential roof repairs, plus huge increases for pool maintenance). Financial idiocy is rampant when managing maintenance monies. Taxes get seriously out of hand, and there’s little to nothing you can do about it.

Condos are generally a bad deal, combining the worst aspects of apartment living with the most onerous obligations of home ownership. But coops are a really bad deal. Steer clear! Now you know why coops are cheaper than condos – hard to sell, hard to find buyers & get them approved.