Co-op, Condo, or Condop? Choosing a New York City Apartment
A New York City apartment may look the same from the inside whether it is a co-op, condo, or condop. The ownership structure, however, affects the purchase process, monthly costs, financing, and what you may do with the apartment later. Before deciding which properties to pursue, it helps to understand those differences.
What Is a Co-op?
When you buy a co-op apartment, you purchase shares in a corporation that owns the building. Those shares give you the right to occupy a particular apartment under a proprietary lease. You do not receive a deed to the apartment itself.
A co-op purchase generally involves an application to the building’s board. The board may review the purchaser’s finances and other information before approving the sale. Co-ops may also set limits on financing, subletting, renovations, and who may occupy the apartment. The rules vary substantially by building, so a buyer should obtain them early rather than assume that one co-op operates like another.
Co-op owners pay monthly maintenance. That charge generally covers building operating costs and the building’s property taxes, and it may include payments on a building mortgage. Buyers should look beyond the current maintenance figure to the building’s financial statements, planned work, and any assessments.
What Is a Condo?
A condo buyer receives a deed to an individual apartment and an interest in the building’s common elements. Condo owners generally pay monthly common charges and receive a separate property-tax bill.
Condos often give owners more flexibility to rent or sell than co-ops, but “condo” does not mean unrestricted. The declaration, bylaws, and house rules may regulate rentals, renovations, pets, and use of the apartment. A condo board may also have a right of first refusal when an apartment is sold. Buyers should review the actual building documents before relying on general assumptions about flexibility.
What Is a Condop?
The term condop usually describes a building with both condominium and cooperative ownership: for example, a cooperative corporation may own the residential portion as a condominium unit, while commercial space is separately owned. A purchaser of an apartment in the cooperative portion still buys co-op shares and receives a proprietary lease.
The name alone tells a buyer very little about the rules. Some condops are marketed as having relatively flexible policies, but the board approval process, financing limits, and subletting rights depend on that building’s documents. Treat an apartment described as a condop as a property whose legal structure and rules need specific review.
Which Is the Better Fit?
Start with how you expect to use the apartment. A buyer seeking a primary residence and comfortable with a board application may find a co-op well suited to their needs. A buyer who expects to rent the apartment, hold it through an entity, or use it only part of the year may want to focus on condos—but must still check each building’s rules. A condop deserves the same document review as a co-op, with attention to the condominium structure above it.
Compare the total cost, not just asking prices or monthly charges. Review property taxes, maintenance or common charges, assessments, financing terms, and closing costs. Then consider the time and uncertainty involved in the particular building’s approval process.
Before You Sign
For any of these properties, have your attorney review the governing documents and the building’s finances. Confirm the rules that matter to your plans, including financing, subletting, pets, renovations, and ownership through a trust or entity. If the apartment is in a new development, review the offering plan and amendments as well.
The best ownership structure depends on the buyer, the intended use, and the particular building. Knowing the label is the starting point; understanding the documents is what makes the choice useful.
For a closer look at the expenses, see Closing Costs for Buyers of New York City Real Estate.