Cooperative (co-op)

A housing complex or building where you become a shareholder in the corporation that owns the property

Co-ops are usually found in big cities like New York and Chicago. Unlike a house or condominium, when you buy a co-op, you will get a stock certificate that shows how many shares you have in the corporation. So, you become a tenant, as well as a co-owner of the building. The more shares you own, which is based on the unit’s size, the more voting power you have in deciding how the co-op is run. You also pay monthly fees to cover your portion of the building’s property taxes and mortgage, and the costs of repairs and improvements for the common areas, such as the grounds and the elevator.

Before buying a co-op be aware that (1) since the tenants depend on each other financially, the building’s board of directors tend to be extremely finicky about new buyers and (2) getting a mortgage can be difficult since lenders don’t always accept stock shares as security for a loan.

Compare: Condominium