So, you’ve decided to buy an apartment in the tri-state area. Congratulations—that’s the easy part.
Now you must choose whether to buy into a cooperative or a condominium. That’s harder. Significant differences exist between the two models of home ownership. Although from a physical standpoint one building may look much like another, co-ops and condos are different products, with very different underlying legal structures. The contents of their respective governing documents can affect your ability to buy, enjoy, and eventually sell your residence.
The Very Basics
“In a co-op, the board has an approval right over any potential purchasers, a vetting process of sorts for financial or some other reasons, as long as the reasons for rejecting an application are not discriminatory,” says Eliot H. Zuckerman, a partner with the law firm of Smith, Gambrell & Russell, LLP, in New York City.
“For people who are buying and selling, the process is smoother in a condo. A condo can’t reject a buyer, but can exercise its right of first refusal and take over the buyer’s contract.” The board could exercise that right if it wants the space for an exercise room or other common area, if it has reservations about the would-be buyer’s financial wherewithal, or if it thinks the sale price is too low and wants to resell the apartment later for a profit.
“If you live in a building and plan to stay there a while, you would likely prefer a co-op,” Zuckerman says. “The board exercises more control over sublets as well as sales. There are many more lease situations in a condo than a co-op, and much less board control over who the neighbors are.”