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What is the Difference Between a Condo and a Co-op?

Posted by James DeMarco on Friday, February 5th, 2016 at 6:21pm.


Chicago offers an exciting real estate market for buyers including two homeownership options that have become very popular and in demand:  the condo and the co-op. Both types of properties are found throughout the Chicago-area with many co-op properties located in the Lincoln Park, Lakeview, Gold Coast and Streeterville neighborhoods.   

So what are the key differences?

Both of these forms of homeownership, the condo and the co-op, have many similarities in regards to the lifestyle they provide. They usually consist of multi-unit residential buildings with amenities such as garage parking, exercise and pool facilities, and outdoor living spaces for enjoyment and entertaining. They also both provide a sense of community and opportunity for interaction with neighbors.  However, here the similarities end.

Ownership vs. Shareholder

When a condo (a.k.a. condominium) is purchased, the buyer has ownership of the apartment unit; whereas, in a co-op (a.k.a. cooperative), the form of ownership is more like that of an investor.  The residential building and all its units and common areas are owned by a member-based corporation with each resident considered a shareholder of that corporation, owning a percentage of the entire building.  Owning shares of stock, in turn, entitles co-op owners the right to occupy one of the apartment units.  Typically the more shares a co-op owner has bought, the larger the apartment unit they will occupy.  Examples of both types of properties currently on the market include the co-op listing at 3500 N. Lake Shore Drive, #11C  (MLS #09048358 – Presented by Coldwell Banker Residential) and the condo listing at 3314 N. Lake Shore Drive, #2D (MLS#09109693 - Presented by Berkshire Hathaway Homeservices).

Selling and Buying Differences

Because a condo unit is owned by the seller, permission by the HOA (Homeowner’s Association) or other condo owners is not required for new buyers to purchase the property.   While there may be an approval process and HOA agreements to agree to by the new buyers, the buying and selling process is not of the same intensity as in a co-op where members or their elected representatives must vote to approve all new buyers who will live in their cooperative.  The screening is very select and buyers are often required to purchase their shares with cash to obtain membership in the corporation.

Monthly Dues and Decision-Making

Condo owners are required to pay HOA dues, usually on a monthly basis, to cover the cost and upkeep of amenities and standard services in the building and common areas.   If larger repairs are required such as replacement of windows or installing a new roof, HOA dues can dramatically increase to cover the incurred expense.  In a co-op, shareholders pay a monthly fee for building upkeep as well, but they also share in paying the monthly mortgage debt, taxes and insurance on the building and salaries of building employees.  The advantage of this sharing of resources is it lowers the cost per co-op owner in the services and products associated with ownership.   In addition, while a condo uses an HOA and input from condo owners to decide on community and building decisions, the co-op shareholders all have equal say on decisions with the building. 

Choosing to pursue homeownership in a condo or a co-op are viable options for many potential homeowners.  Both have proven to be profitable and the market continues to grow in demand for both.  Difference between condo and co-op

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