{"id":24179,"date":"2021-05-27T10:29:48","date_gmt":"2021-05-27T17:29:48","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=24179"},"modified":"2024-03-12T09:41:45","modified_gmt":"2024-03-12T16:41:45","slug":"buyer-what-is-a-cooperative","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-what-is-a-cooperative\/","title":{"rendered":"What Exactly Is a Cooperative? And Is It Smart to Buy Shares In One?"},"content":{"rendered":"

Whether you dream of ducking out for pizza at 2 a.m, or you want your home to support a sustainable future, if you\u2019re shopping for a home in some areas of the country, you might stumble across a co-op. Even though the real estate listing shows two bedrooms and a balcony, and it\u2019s similar to a condo<\/a>, a co-op purchase is unique.<\/p>\n

Ariel Pena<\/a>, an experienced agent in New York<\/a> City who handles more condos than the average agent in his area, says that \u201dthe most common misconception about co-op\u2019s is that buyers confuse them a lot with a condo.\u201d If you\u2019re moving to the city from an area where co-ops are uncommon, then it\u2019s definitely confusing!<\/p>\n

To clear up this confusion, here\u2019s what you need to know about buying into a cooperative.<\/p>\n

\"An<\/a>
Source: (Priscilla Du Preez \/ Unsplash)<\/figcaption><\/figure>\n

What is a cooperative, also known as a co-op?<\/h2>\n

It can be helpful to think of joining a co-op as buying into the entire building as compared to buying a single condominium unit within a building. A cooperative or co-op is a collection or group of households that jointly own equity shares in a big piece of real estate. Each household owns a share rather than an individual unit.<\/p>\n

The co-op divides shares according to the size and desirability of the units. Square footage, corner units, and balconies all add value to a unit. A person buying shares for a two-bedroom unit would purchase more shares than someone buying a studio unit.<\/p>\n

According to Pena, when you buy into a co-op, you don\u2019t get a deed<\/a> like you would with a home or condo purchase<\/a>. Instead, \u201cyou get a proprietary lease that gives you the right to occupy the space that pertains to the number of shares for the units you purchase.\u201d<\/p>\n

The co-op itself is a corporation that owns and operates the real estate in question; it\u2019s run by a board of directors and controlled jointly by the shareholders\/homeowners. It has governing documents similar to a condo association (COA) or homeowners association HOA<\/a>. If you purchase shares in the co-op, you have to follow these rules<\/a>.<\/p>\n

Where do you find co-ops?<\/h2>\n

Co-ops are most common in buildings with multiple units, similar to apartment buildings or condominiums. But you\u2019ll also find them in mobile home parks or retirement communities<\/a>. Some home types are especially popular for co-ops:<\/p>\n