Benefits of owning a co-op apartment
 | The monthly Co-op fee for this unit in the Hawarden is only $545. The charges cover your proportionate share of operating and maintaining the cooperative, property taxes, management fees, maintenance costs, insurance premiums, utilities, and contributions to reserve funds. The fee is also low because there is no underlying mortgage (a term used to describe the first mortgage taken out by a housing cooperative corporation). Since the cooperative corporation owns the land and the buildings in which its members live, it can borrow money secured by the property as a whole. |
| Co-op unit owners enjoy all the benefits of homeownership plus more. As a homeowner, you can take advantage of deductible mortgage interest and property taxes, and your individual share loan. You enjoy the same shelter from capital gains taxes on sale. |
| You build equity as your co-op apartment’s value increases and your loan is paid down. You can buy or sell a membership or shares at whatever price the market will bear. Purchase prices and equity accumulation are very similar to condominium or single-family ownership. |
| You enjoy fewer closing costs than for a single-family home or a condominium. Because you are buying shares in a corporation, not the physical property itself, no title search, title insurance is needed nor survey or recording, saving you thousands of dollars in closing costs. |
| Co-op ownership offers greater financial flexibility as well. Since the co-op corporation owns the land and buildings as a whole, the cooperative can mortgage the property as a whole (the underlying mortgage). Unit owners have no personal liability for the underlying mortgage. This means when faced with large-scale improvement projects such as putting on a new roof, replacing windows or installing a new elevator, the corporation has access to competitively priced long-term debt. |
| Property taxes are assessed on the co-op as a whole, and tax appraisals for a co-op building are usually lower than the sum of appraisals on a similar building of condo units. Real estate taxes are assessed against the co-op as a whole in most states, and therefore do not jump following each resale within the co-op. Since condos are resold individually, the appraisals and higher sales prices are recorded separately. This has the effect of producing higher assessed values and consequently, higher property taxes. Coops, as sales of stock, are not recorded at all and the only way a sale could be reflected in tax rolls is if the entire piece of property were sold. |
| More control over rules and regulations. In a condo you have less power and governance over rules. The co-op is a legal cooperative corporation. Members of the co-op are the people living in the co-op and they run the co-op—from organizing social activities, to maintenance, to handling finances, to landscaping. The members set the by-laws of the co-op and also elect, from among themselves, a board of directors. The board makes sure that things run smoothly and according to the co-op’s by-laws and operating agreements |
This site was last updated 02/21/07