Types of Property Ownership
A condominium is a collection of individual home units and common areas along with the land upon which they sit. Condominium has a condo board who are homeowners of the condo unit. The Condominiums have conditions, covenants, and restrictions, and often additional rules that govern how the individual unit owners are to share the space.
The Co-Op is building that is structured as corporation. Instead of owning an apartment, people own shares in the building (like the stock market), according to the size and value of the apartment itself.
Co-Op building has its own co-op board and has more restrictive policy about ownership and its bylaws. Definitely not for investors due to the non-rental or restricted rental policy.
(Condop is a coined word between condominium and cooperative)
The legal entity of the condop is a co-operative. It is the same as the co-op except the condop adopts the condo policy allowing the homeowner to lease and sell without the tenant and the buyer to go through a mandatory face-to-face interview with the condop board and does not require the condop board’s approval before the owner can sell or rent.
The ground floor of the condop which is usually commercial units is converted into a separate “condominium” which is either owned by an outside investor or the original sponsor of the building.
Some of the condops were built on leased land (land-lease building).
Townhouse (also known as brownstone)
Townhouse is a residential building either with one single or multi-family. The ownership of a townhouse is the same as that of a house with deed.
Comparative features between Condo vs. Co-op
|Condo building has no stipulation of the required down payment for the purchase||The co-op board stipulates the required percentage of the down payment by the buyer. Some co-op buildings can require as high as 50% down payment or even require all cash purchase|
|Usually there is no flip tax upon the sale of the condo unit. Now there are condo buildings also asking for the seller to pay flip tax to the condo building||Usually there is flip tax required by the co-op board upon the sale of the co-op unit. The flip tax percentage differs from building to building|
|Buyer & tenant have to submit board application for the purchase and leasing process||Buyer & tenant have to submit board application for the purchase and leasing process|
|No face to face board interview for both buyer and tenant; and no condo board approval is required||Face to face board interview for both buyer and tenant are required (if the co-op building allows renting of the co-op unit); and co-op board approval is also required for both sale and rental|
|Owner has deed||Owner has proprietary lease with share|
|Owner can rent out the condo unit at will||Owner cannot rent out the co-op unit at will depending on the co-op building’s bylaws. Usually it is restricted to rent.|
|Owner will receive the property tax bill from the City of New York, and is responsible to pay his own unit’s real estate tax||Owner will not receive real estate tax bill for his co-op unit.
Real estate tax is paid through the co-op building which will be included in the monthly maintenance bill
|No underlying mortgage for the building||Usually there is underlying mortgage for the building|
|Only mortgage interest for the condo unit is tax deductible||The homeowner can deduct the Co-Op Unit’s mortgage interest payment in addition to the building’s underlying mortgage interest payment.
At year end, the co-op tax accountant will issue the amount to deduct per share for the mortgage interest and for the real estate tax paid
|Foreign National can buy||Co-Op board may not accept non U.S. citizen and non U.S. resident without the permanent resident card|
|The purchase price is higher||The purchase price is lower|
|The monthly common charge cost is lower||The monthly maintenance cost is higher because the co-op building has to pay for the building’s underlying mortgage|