What Best Describes a Condop and How Does It Work?

In dense urban landscapes, unique property structures often emerge when traditional ownership models don’t align with diverse needs. This article aims to clarify one such distinct property type known as a condop.

Defining a Condop

A condop represents a distinct hybrid property structure, blending characteristics typically found in both condominiums and cooperative apartments. A condop building is legally established as a condominium, but its residential units are owned by a cooperative corporation. Individuals seeking to reside in a condop purchase shares in this cooperative corporation, granting them a proprietary lease for a specific residential unit, similar to a traditional cooperative.

The Unique Structural Components

The legal architecture of a condop involves a layered ownership system, dividing the building into at least two separate condominium units. One unit encompasses all residential spaces, owned by a single cooperative corporation. The other unit, or multiple units, comprises commercial spaces like retail stores or offices, usually owned by a separate entity.

When individuals acquire a residential unit in a condop, they purchase shares in the cooperative corporation that holds the deed to the residential condominium portion of the building. This share ownership provides them with the right to occupy a specific apartment through a proprietary lease. This intricate arrangement means that while the building itself operates under condominium governance for its primary divisions, the residential component functions under cooperative rules and regulations. This dual-layered structure influences the overall governance, maintenance responsibilities, and operational dynamics of the entire property.

Key Distinctions from Condos and Co-ops

A condop unit is acquired through the purchase of shares in a cooperative corporation, granting a proprietary lease, which contrasts with a condominium where an individual receives a direct deed. Unlike a pure cooperative where the entire building is owned by the co-op corporation, a condop structure means the co-op only owns the residential portion, which is itself a condominium unit.

Governance in a condop often involves a primary residential cooperative board overseeing shareholder matters, distinct from a typical condominium association board that governs the entire property directly. Financing a condop unit typically requires a “share loan,” which is a loan secured by the shares and proprietary lease, rather than a traditional mortgage. Share loans often have different terms and requirements compared to conventional real estate mortgages.

Regarding taxation, the cooperative corporation within a condop structure pays the real estate taxes for the entire residential condominium unit it owns. These property tax expenses are then passed on to individual shareholders as part of their monthly maintenance fees, similar to a standard cooperative arrangement. This differs from a condominium, where each unit owner is directly assessed and pays their own property taxes. Residential condop units generally adhere to more restrictive subletting policies, mirroring the stringent rules often found in traditional cooperative buildings.

Practical Considerations for Owners and Buyers

For individuals considering a condop unit, the buying process involves distinct steps influenced by its cooperative structure. Prospective buyers must undergo a comprehensive application process, including a financial review and an interview with the cooperative board. This rigorous screening is significantly more involved than purchasing a condominium unit, which typically only requires lender approval and a title transfer.

Once acquired, owners pay monthly “maintenance fees” to the cooperative corporation, which cover a range of expenses. These fees typically include the building’s underlying mortgage, real estate taxes on the residential condominium unit, and operational costs like utilities, insurance, and staff salaries. This differs from a condominium, where owners pay “common charges” primarily for shared amenities and building upkeep, and separately pay their own property taxes and often their individual mortgage.

Life within a condop is governed by the cooperative’s bylaws and house rules, which can impose more limitations on residents than a condominium association’s regulations. These rules might cover aspects like renovations, pet policies, and even the hours for moving. When it comes time to sell, the resale process for a condop unit necessitates approval from the cooperative board for any new buyer, adding an additional layer to the transaction compared to the less restrictive resale process of a condominium.