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Two key differences between condo and co-op

On Behalf of | Jul 8, 2024 | REAL ESTATE LAW - Condominiums & Cooperatives |

Florida attracts many people due to its reputation as a great place to live. There are various residential options here, including condominiums and cooperatives. While both can offer a sense of community and shared amenities, there are at least two important differences between them to know about before making real estate decisions.

The core distinction is in terms of ownership

When you buy a condo, you own the actual unit, similar to a single-family home. Upon closing, you receive a deed granting you legal title to the property from the walls inward. You also own a shared interest in the shared areas of the building, like hallways, pools and grounds.

In a co-op, you do not directly own the unit, but you acquire shares in the corporation that owns the entire building. This grants you a proprietary lease, which gives you the exclusive right to occupy a specific unit.

Condos are easier to finance, co-ops can be challenging

Lenders view condominiums as real estate with the unit itself acting as collateral. This means you can make lower down payments, sometimes as low as 3%, depending on your lender’s program.

The case may be different with co-ops. Some lenders may be hesitant since you are not technically buying real estate but shares in a corporation. Coop boards tend to wield more power and carefully review potential buyers (including financial information, employment history and whether the buyer is a good fit for the building) before approving the sale. Some boards may also restrict or even prohibit financing altogether, so be prepared for a potentially larger down payment if financing is available.

The best option depends on your priorities

When making your decision, make sure to carefully consider your needs, financial situation and desired lifestyle. Condos offer more traditional ownership and potentially easier financing. Co-ops may have stricter oversight but could offer a stronger sense of community. Consulting with an attorney familiar with Florida condo and co-op laws and regulations can provide valuable guidance throughout the process.


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