Co-op Vs. Condos in D.C.: You Need to Know These 5 Differences

    Washington has one of the largest concentrations of housing co-ops and condominiums. So, first-time property owners often consider these two options.

    Since both co-ops and condos are in a multiunit structure, they are often confused with each other. However, they differ in many aspects, particularly, in these five things.

    What You Own: Real Property Vs. Personal Property

    In a condo, you own real property evidenced by the Property Deed for the unit. You also share the ownership of the common areas with other unit owners.

    In a co-op, what you are buying an interest in the non-profit corporation that owns the building. These shares will be part of your personal property.

    Often, you will receive an ownership contract or shares in the association and a property lease. Being a co-op member entitles you to permanent rights to live in the unit and the use of common elements in the building.

    How You Sell or Transfer the Property

    Anyone with financial capacity can own a condominium unit. In a co-op, the Board has to approve the sale or transfer of the co-op units.

    Between the two, selling a condo unit is more tedious. It involves a title search, paying title insurance, and securing the resale certificate. In a co-op, the Board handles the transfer or employs a Transfer Agent or an Accredited Real Estate company.

    What Your Monthly Payments Include

    Both co-op and condo owners pay monthly fees for the management, operation, maintenance, and repairs of the building. The main difference lies in taxes.

    A co-op will pay for the real estate tax of the entire property. Members will pay their share of this expense through monthly assessment fees. On the other hand, condo owners receive the real estate tax assessment. The unit owner is responsible for this liability to the government.

    Who Manages the Property

    The Articles of Incorporation, By-Laws, and House Rules govern cooperatives. The members elect the Board of Directors to manage the property. In a condominium, there is a property manager, and the homeowner’s association exist through a declaration. There is also a set of By-Laws and Rules imposed by the management.

    There are also differences in renting out the property. You can’t rent out a co-op unit without Board approval. Meanwhile, in a condominium, you only have to inform the management of the arrangement.

    Your Financing Options and the Parties Involved

    Most banks and financial institutions accept condominium units as collateral. Borrowing money by using ownership in a co-op unit is available as long as there is a Recognition Agreement.

    The Recognition Agreement is a legal document that recognizes the lender’s security interest over the borrower’s unit. For this document to be valid, the cooperative and the lender should agree to its terms and conditions.

    So, which would you go for – a condo or a co-op?

    Whatever your preferences might be, it’s best to understand these differences before making a better decision.

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