eli5: What is the difference between a condo and a housing co-op?

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eli5: What is the difference between a condo and a housing co-op?

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In a condo situation the individual owners own their units and the condo association owns the common property. Each individual owner contributes a share to the association and the association uses that money to maintain the common property. A condominium cannot restrict the rights of buyers or sellers.

In a co-op the co-op owns everything and individuals buy a “share” of the whole – that share including their individual unit and a portion of the common property. Because the co-op owns the whole, they can legally refuse to sell to someone who doesn’t meet the co-ops standards, because the person buying in isn’t buying the unit as a separate entity, but the unit as a “share” of the whole.

This is important in mortgage lending because many lenders will not cover certain kinds of shares, but will cover deeded property.