Distinguishing the differences between a condo and co-op may seem confusing. According to Cheryl Lock's article, "co-ops make up about 75 percent of New York’s real estate market....However, you’ll usually have to pay up 20 percent or more for a co-op down payment, while with condos you can sometimes put down with less."
For those looking to buy or are searching for an understanding, we break it down for you.
In a condo, the owner owns the interior of the unit and a percentage of common ownership. Common ownership is based on square footage of the interior in comparison to the entire buildings’ square footage. It is important to know that paying maintenance fees in a condo building will not give you a share or ownership of the building.
You have to pay monthly fees which include mortgage and taxes. Other fees that you are paying for include:
- Master Insurance Policy: The building's exterior is covered by the blanket insurance policy aka the master insurance policy. For example, if a leak from rain occurs in a unit and it affects all units below it, your master insurance policy will cover it. However, if a leak penetrates your ceiling due to another owner's negligence and does interior damage to your unit, the negligent owner may be liable for the repairs to your unit. You should obtain your own interior insurance policy to cover this type of incident. This type of individual policy is usually inexpensive.
- Water: Water is supplied to the building and water heaters are usually carried over in the sale of the unit. Water heaters typically run on natural gas, so the only expense to occur for the owner is on their natural gas bill.
- Common Hallway Electric: The lights in the hallways are ran off of electricity provided by the homeowners association, and are included in your monthly fees.
- Property Management: Property Managers are responsible for the building’s overall upkeep 24 hours a day, 7 days a week. If there is a problem within a unit, alert the property manager. The property manager’s responsibilities may also include preparing an annual budget for the building, paying the property’s underlying mortgage, real estate taxes, water/sewer and insurance bills and other incidentals. The super’s responsibilities include the building’s general maintenance such as sweeping and mopping the common areas, snow removal, garbage removal, etc.
- Building amenities: If your building has amenities such as a gym, pool, etc., the costs to hold the upkeep are covered in the maintenance fees.
In simpler terms, a condo is an individually owned apartment with access to building amenities.
Co-op maintenance fees more expensive than condo fees because you are buying into the equity of the entire building. To own equity is to buy shares in the corporation, which gives you the right to live in a particular unit within the building.
- Overall Maintenance of the Property - Maintenance fees cover the upkeep of the property including certain amenities the Co-op may offer. These include: maintaining the exterior and interior integrity of the building, such as cleaning hallways, general repairs, (including plumbing and electrical), painting, gardening, garbage and snow removal, elevators, etc.
- The Co-op Unit - Depending on the circumstances, your maintenance fee will also cover pest control services, and any needed repairs to heating, plumbing and electrical behind the walls of the unit.
- Utilities- Depending on the co-op, your maintenance fees usually covers utilities such as water, heat. Gas and electric charges are usually the unit owner's responsibility. If electric is included, sometimes there is an additional fee for use of the air conditioner during the summer.
- Property Taxes - The property taxes are included in the maintenance fees. This means that a part of your maintenance fee is tax deductible.
The maintenance is also separate from your mortgage payment. The maintenance fee helps you to have many services available to you, giving more convenience and an easier way of living.
A co-op is an apartment building that’s owned by a corporation. Co-ops are self-governed and often self-maintained.
Condos and co-ops provide different costs and benefits to owners. Look at both properties when the opportunity arises and consult with a real estate agent to help you find the right fit for you.