Wednesday March 05, 2025
What’s the difference between a condominium and a cooperative? The main difference between condos and co-ops boils down to who owns the property. While both offer unique benefits, there are important differences in ownership structure, financing, and governance.
If you’re deciding between purchasing a condo or co-op in New York City, it’s key to find the right fit for your lifestyle and financial goals. Understanding these nuances can help you navigate the buying process with confidence.In this article, our real estate experts explain the difference between condos and co-ops, explore how their boards operate, and show how professional property management company can support boards and residents in both types of buildings.
What is a condominium?
In a condo, each owner holds a deed to their individual unit and has partial ownership of the building’s common areas. Condo owners are responsible for their own property taxes while paying common charges for building maintenance and amenities. The building is managed by a condo board, which oversees shared spaces and enforces building rules, but does not control unit sales or ownership transfers.What is an cooperative?
Unique to New York City, a co-op, is a form of ownership where residents (called “shareholders”) do not own their individual unit outright, but instead own shares in a corporation that owns the entire building. In exchange, shareholders receive a proprietary lease granting them the right to occupy a specific unit. Similar to a condo, the shareholder is responsible for monthly maintenance fees. The co-op board typically plays a larger role in governance, including approving new shareholders and managing property taxes and mortgages.Condos vs. co-ops | The main differences
Ownership structure
Condo owners hold a deed to their individual unit. Co-op shareholders own shares in a corporation that owns the building and receive a proprietary lease to occupy a specific unit.Buying process
In condo buildings the approval process for a buyer typically involves fewer steps compared to a co-op approval. Applicants can expect a board interview and a request for financial documents. When considering an applicant, condo boards are bound to the bylaws of the property. The board cannot make a rejection without its presence being noted in the bylaws, which must clearly state any legitimate reason to reject a buyer.The co-op purchasing process often involves more steps for applicants compared to purchasing a condominium. The approval process can include multiple interviews with the co-op board, detailed background and financial checks, and large application packages. Co-op boards also have more latitude to reject an applicant compared to a condo board.
Fair Chance for Housing Act: Protecting applicants from illegal discrimination
In 2024, the New York City Council passed the Fair Chance for Housing Act, which sets new requirements on how “housing providers” may use criminal background checks to determine an applicant’s eligibility to reside at their property. Click here to learn what this means for condos and co-ops in New York.Monthly costs
Condo owners pay “common charges” for shared building expenses, while property taxes are paid separately. Co-op shareholders pay “maintenance fees,” which often include building operations, property taxes, and utilities in a single payment.What are the rules for subletting an apartment in a condo or co-op?
Condos typically allow subletting with possible restrictions. Co-ops usually have stricter subletting rules, including time limits and an application/approval process for each prospective renter.Board governance
Condo boards primarily manage building operations and common areas while enforcing building rules. Co-op boards have broader authority, including approving new shareholders and managing property taxes and mortgages.Prospective buyers should always consult each building’s bylaws before deciding which property is right for them.
Differences between condo and co-op boards
A condo board, called the board of managers, primarily manages shared spaces, oversees building-wide maintenance, and makes financial decisions related to common expenses. The board is responsible for setting “common charges,” maintaining a reserve fund, and levying assessments when needed for major repairs or capital improvements. However, since condo owners are financially independent when it comes to their units, the board does not regulate individual ownership beyond enforcing building rules. The board does not approve or deny buyers, though it may have a “right of first refusal,” meaning it has the option to purchase a unit before a prospective buyer does.A co-op board of directors, due to the cooperative ownership structure, plays a more active role in governance. The co-op board is responsible for approving new shareholders, which includes reviewing financial qualifications and, in many cases, conducting interviews. Because the financial structure of a co-op is more centralized — where maintenance fees typically include property taxes, utilities, and building-wide expenses — the board is also tasked with managing the building’s overall financial health.
Learn more in our article, “Is your condominium or cooperative board doing a good job?”
How a professional property management company can help
The best management companies offer solutions that reduce operating costs without sacrificing quality of service, in-house compliance experts, insurance and risk mitigation consultants, and education to keep their boards up to date on emergent legislation and best practices:-
Lending and cash management:
FirstService Financial, the banking and lending affiliate of FirstService Residential, closed over $500 million in loan volume across hundreds of individual properties in 2022, with negotiated interest rates averaging 50 basis points lower than what our clients could obtain on their own. This value-added service saves our clients more than $1.5 million in annual interest expenses every year.
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Compliance:
Our Compliance Department frees up valuable time for your property manager to focus on important board business and building priorities. These in-house experts resolve disputes and violations, actively monitor local law updates, and track deadlines to prevent future violations.
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Risk mitigation and insurance:
FS Insurance Brokers, our affiliated insurance brokerage, leverages the size of our property portfolio and historical claims and loss data to negotiate policies that result in lower annual premiums with better terms and coverage limits. Our team has co-brokered over 3,200 placements for our clients, saving them over $5.5 million in annual insurance premiums.
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Energy:
Our energy management and advisory affiliate, FirstService Energy, helps boards significantly enhance their building’s energy efficiency and comply with New York City local laws. Our strategies help reduce energy costs, consumption, and emissions.
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Construction management:
FirstService Project Management serves as a building owner's representative for residential and commercial construction projects. Our in-house affiliate comprises a team of project managers with decades of experience guiding boards and owners through complex capital improvement projects. These experts specialize in all aspects of project management including interior renovations, resiliency projects, restoration, exterior construction, and mechanical upgrades.
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Customer care:
Our 24/7 Customer Care team is a multilingual resource available to residents. Much more than your typical customer support line, the service is operated by specially trained associates with access to our resident database, updates from your property manager, billing information, and more. Most calls are answered within one minute and 75% of inquiries are resolved on first contact.