What is a Co-Op vs. a Condo?

(December 29, 2016 )

Co-operative Ownership  Shares in Co-operativeEvery now and again our client's come across listings that show the title to land as "Shares in Co-operative" instead of "Freehold Strata" and ask what it means.

Before there were Stratas, there were Co-ops.

"Cooperative" Definition:  In the cooperative form of ownership, each owner owns a share in a company or cooperative association which, in turn, owns a property containing a number of housing units. Each shareholder is assigned one particular unit in which to reside.

Co-op stands for "Co"mpany "Op"erated, meaning the building is run by a company and as a Buyer, you became a shareholder. The company owns the building and the freehold land.

Along with being a shareholder, there is a lease attached to the shares to identify the specific apartment you are purchasing. The lease is for a predetermined period of time, 25-200 years, which was set when the company was incorporated. Once the lease has come to an end, it is renewed by the shareholders for another term.

Below is some general information on Co-ops:

  1. In a Co-op, you own shares in a corporation rather than a direct interest in land. The corporation holds the title to land.

  2. Co-ops are similar to leasehold land in that they tend to appreciate less than freehold property. They can have fewer buyers when you want to sell because of the land ownership structure,  the restrictions that Co-ops can have, and financing is harder to obtain. 

  3. Co-ops are harder to finance because you don't actually own the unit or land directly - you own shares of a corporation that owns the property. For this reason, many banks require a higher minimum down payment to finance Co-Ops (35% down is common).

  4. Generally, there can be more restrictions with Co-ops:  

         - For example, many co-ops prevent rentals, pets and have age restrictions (+19 yrs).
         - Sometimes the Board approves who can buy your shares when you're selling.
         - For some Buyer's, the restrictions can be a benefit because of the demographic control of future                            &  current owners.
        -  Sometimes the restrictions attract owner's who share common wants and tend to be pro-active so some           Co-ops are run extremely well.

  5. A benefit of Co-ops is they tend to have lower taxes and can have less value, which means you can get a larger home for less cost per square foot. 

Think a Co-op might be right for you?

Let us know and we'll send you available listings from awesome Co-ops in the Westend and Downtown Vancouver.