ABA Family Legal Guide

Home Ownership

Shared Ownership: Condos and Condominiums

What's the difference between a cooperative and a condominium?

In a cooperative, the members are stockholders in a corporation that owns the entire building, including the residential units and all common elements such as corridors, elevators, and tennis courts. Stockholders don't actually own any real estate. The corporation owns it all. Instead, stockholders lease their individual units from the corporation. Each stockholder pays a monthly maintenance charge, which is a proportionate share of the corporation's cash requirements for mortgage payments, operation, maintenance, repair, taxes, and reserves. The corporation, governed by an elected board of directors, may veto a proposed transfer of stock with its lease, so it has considerable control over potential buyers.

Condominium ownership provides you exclusive title to your own unit, from the interior walls in, and ownership of an individual interest in the common elements of the condominium. With limitations, you are free to mortgage your unit or sell it. As in a cooperative, all unit owners must pay their share of the assessment for operation, maintenance, repair, and reserves. The association is responsible for enforcing the rules and managing the common elements, but it doesn't actually own anything.