Co-ops

One of the real estate questions that we field frequently when people are looking at spaces in the city is: What’s the difference between a co-op and a condo? Buying in a cooperative (or co-op) building has distinctions from buying in a condo building. Rather than owning the space outright, you own shares in a corporation that owns the real estate. As a term of your stock ownership, you are allowed to occupy a specific space as outlined in a Proprietary Lease.

Chicago has a handful of cooperative Pre-War and Art Deco buildings, particularly in the Gold Coast, Hyde Park, Lakeview and Lincoln Park. A few things to keep in mind when looking at a co-op:

• In a co-op, buyers hold equity in the overall building (similar to the shareholders of a corporation), but do not own the property outright.
• The co-op’s governing association may hold intensive criteria for accepting new owners, including interviews, deep financial auditing, job details, etc., and have the right to reject any applications they deem unfit,in the goal of creating a “community” of more like-minded tenants who generally have the same living habits.
• Co-op boards often require high down payment requirements (sometimes up to 50%) and may require cash-only deals.
• Co-op buildings tend to be older vintage buildings.
• Another thing to keep in mind is that the higher restrictions on buyers may impact how quickly you are able to sell a co-op share when the time comes to move.
• In a co-op, you will not receive anindividual real estate tax bill. The County issues a single tax bill to the corporation, and as a shareholder, you willpay a share of the total bill based on the number of shares of stock you own. In some co-op buildings, real taxes will be included in your monthly assessments.
• Unlike condo associations, co-ops will not have special assessment fees. Instead, the corporation will obtain a mortgage or other loan to complete any capital projects, and your share of the new debt will appear as an increase in your monthly fees.