Manhattan CO-OP vs CONDO
Determining which is right for you


Both are distinct forms of property ownership with their own set of legal and financial considerations. You may find that one suits you better than the other.

Here are the pros and cons of Co-op vs Condo:

CO-OPS - USUALLY PRE-WAR BUILDINGS

Pros


  • Large selection: approximately 80% of all apartment buildings are co-ops in the New York City limits.
  • Usually offer thicker walls, creating greater quiet.
  • When compared with equal size, location and condition, co-ops cost 20% to 30% less than condos.
  • Run like a country club, the Board can weed out what they consider to be "unsuitable neighbors".
  • Offer stricter renting policy, thereby providing less turnover.
  • Carry closing costs of approximately 1% of the contract price which is far less than condos.


Cons


  • Usually require a minimum down payment of 25%.
  • Usually require Board approval. Boards may refuse a prospective buyer without disclosing cause.
  • Most Boards scrutinize a prospective buyer's liquid assets, income, debt, etc.
  • Offer stricter house rules: Boards usually only allow shareholders to rent out their unit for up to two years, providing the owner has lived there for at least two years and the prospective tenant is accepted by the Board.
  • Often the monthly maintenance exceeds that of a condominium's common charge and real estate taxes.
  • In an effort to keep enough money in the building's reserve fund, many Boards have instituted a rule requiring sellers to pay either a percentage of the sale of their apartment, or a percentage of the net profit of the sale of their apartment, to the building association. This is commonly referred to as a flip tax. If the apartment you buy is in a building that imposes a flip tax, you will be required to pay the amount designated in the house rules when you decide to move.

CONDOS - USUALLY POST-WAR BUILDINGS

Pros

  • Usually require a down payment of only 10%.
  • Easier ownership: There is no Board approval. Instead, the condominium association has a first right of refusal. In order to be turned down by the condominium association, the association must buy the condominium from the seller at the price agreed to by the buyer
  • There are rarely house rules concerning renting or pets; owners can do as they choose.
  • Monthly common charges and real estate taxes are often less expensive than a Co-op's maintenance.
  • Very marketable! With no Board approval, flexible usage available, a minimum down payment of only 10%, and a relatively small selection available, condos are valued at approximately 20 - 30% more than co-ops of equal size, location and condition.
  • Greater amenities: While not always the case, many condos offer health clubs, swimming pools, garages and 24-hour doormen.

Cons


  • Small selection:. Approximately 20% of all apartment buildings are condos.
  • Often have thin walls and cookie-cutter type apartments.
  • Cost 20 - 30% more than a co-op of equal size, location and condition.
  • Offers no Board to screen out less desirable neighbors.
  • Almost always allow pets and renters.
  • Usually require a down payment of only 10%, very attractive to a less affluent buyer.
  • Carry very expensive closing costs; often exceeding $20,000.
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