More info on co-ops

While most people in the Midwest understand the concept of owning a condo, they are less familiar with co-housing or co-ops. The article below does a good job of describing the differences between co-ops and co-housing:

“Co-operative (or “co-op”) housing is in effect non-market rental housing owned and managed by its residents through a co-operative association; in Canada they have enjoyed subsidies from the federal government that are currently under review. “Co-housing” is a bit different: a grouping of private homes that share common space. Most co-housing projects are legally recognized as strata housing.

Both housing styles have independent family residences as well as communal amenities and recreation space. While co-op housing is government subsidized and not-for-profit, co-housing is privately owned and managed. This means that the cost of living in co-housing rests at market rates, unlike co-op housing, which offers affordable living below private sector rental rates.”

This link gives a nice side-by-side comparison between co0ps and condos:

“A condo is “real property.” Each unit owner owns an individual apartment in perpetuity and owns an undivided interest in the common elements of the building including the exterior walls, the roof, and lobby. Ownership of a condo is more like a house and the owner will have a deed as evidence of that ownership.

Coop buildings are owned by a non-profit corporation. When one purchases a unit in a coop building, they are really purchasing shares in the corporation, which come with a “proprietary lease” to the unit. Technically, the shareholder does not actually own the apartment, but a piece of the corporation. The larger the apartment, the more shares of the corporation are owned. Buying a coop is generally thought to carry a higher degree of risk, because you are investing in a corporation. If the corporation is in poor financial condition, the shareholder could potentially lose the coop apartment. In other words, invest wisely( At the same time, HOA these days have a lot of issues as well)

There are more to it than that, but you might want to know also:
Property taxes are generally lower in coops than in condos.
As a broad rule of thumb, coops tend to have lower purchase prices than condos.”


“A housing cooperative, or co-op, is a legal entity, usually a corporation, which owns real estate, consisting of one or more residential buildings; it is one type of housing tenure. Housing cooperatives are a distinctive form of home ownership that have many characteristics that differ from other residential arrangements such as single family home ownership, condominiums and renting.[1]

The corporation is membership-based, with membership granted by way of a share purchase in the cooperative. Each shareholder in the legal entity is granted the right to occupy one housing unit. A primary advantage of the housing cooperative is the pooling of the members’ resources so that their buying power is leveraged, thus lowering the cost per member in all the services and products associated with home ownership.

Another key element is that the members, through their elected representatives, screen and select who may live in the cooperative, unlike any other form of home ownership.[1] Housing cooperatives fall into two general tenure categories: non-ownership (referred to as non-equity or continuing) and ownership (referred to as equity or strata). In non-equity cooperatives, occupancy rights are sometimes granted subject to an occupancy agreement, which is similar to a lease. In equity cooperatives, occupancy rights are sometimes granted by way of the purchase agreements and legal instruments registered on the title. The corporation’s articles of incorporation and bylaws as well as occupancy agreement specifies the cooperative’s rules.

Market-rate and limited-equity co-ops

There are two main types of housing co-operative financing methods, market rate and limited equity. With market rate, the share price is allowed to rise on the open market and shareholders may sell at whatever price the market will bear when they want to move out. In many ways market rate is thus similar financially to owning a condominium, with the difference being that often the co-op may carry a mortgage, resulting in a much higher monthly fee paid to the co-op than would be so in a condominium. The purchase price of a comparable unit in the co-op is typically much lower, however.

With limited equity, the co-op has rules regarding pricing of shares when sold. The idea behind limited equity is to maintain affordable housing. A sub-set of the limited equity model is the no-equity model, which looks very much like renting, with a very low purchase price (comparable to a rental security deposit) and a monthly fee in lieu of rent. When selling, all that is re-couped is that very low purchase price.

In the United States, housing co-ops are usually categorized as corporations or LLCs and are found in abundance from Madison, Wisconsin to the Greater New York metropolitan area. There are also a number of cooperative and mutual housing projects still in operation across the US that were the result of the purchase of federal defense housing developments by their tenants or groups of returning war veterans and their families. These developments include seven of the eight middle-class housing projects built by the US Government between 1940-42 under the auspices of the Mutual Ownership Defense Housing Division of the Federal Works Agency. There are many regional housing cooperative associations, such as the Midwest Association of Housing Cooperatives, which is based in Michigan and serves the Midwest region, covering Ohio, Michigan, Indiana, Illinois, Wisconsin, Minnesota, and more.[14]

The National Association of Housing Cooperatives (NAHC) represents all cooperatives within the United States who are members of the organization. This organization is a nonprofit, national federation of housing cooperatives, mutual housing associations, other resident-owned or controlled housing, professionals, organizations, and individuals interested in promoting the interests of cooperative housing communities.[15] NAHC is the only national cooperative housing organization, and aims to support and educate existing and new cooperative housing communities as the best and most economical form of homeownership.[16]”


“Property taxes

Probably the most common type of local tax exemption for nonprofits is from property taxes, which may apply to office equipment, automobiles and other “personal” property as well as to real estate. Usually the property has to be directly used in the activities that qualify for nonprofit status; property that is owned and rented out for commercial purposes probably is taxed just like the buildings up the street. Frequently there is an application that must be filed to claim property tax exemption and either a renewal process or spot checks by revenue agents to be sure the use of the property hasn’t been changed in a way that makes it ineligible.

Increasingly, cash-strapped local governments are seeking PILOTs (“payments in lieu of taxes”) from nonprofits, especially from large institutions and especially in cities where the tax-base is limited because of the number and size of tax-exempt organizations (both nonprofits and governments). Arrangements for PILOTs may be negotiated, and some large institutions agree to pay them because they accept the argument that they, and their employees and clients, benefit from the municipality’s services. In other cases, the negotiations can be difficult and result in bad feelings, or worse, affecting community morale.”






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