NYC Real Estate Pros Reveal Everything to Know About Buying a Co-Op

You make a lot of big choices when buying your first home. One of which, of course, is what type of home you want to live in. If you reside in a metro area, condos are popular but pricey. Co-op housing is often less expensive than traditional real estate — however, it’s not always an outright bargain. You might know co-op is short for cooperative housing, but beyond that, you’re probably wondering the following question: What is a co-op?

From a lengthy application process and strict income requirements to a unique decision-making process, there’s much to learn about this communal living situation. To help you understand co-op ownership, I spoke with licensed associate real estate broker Kimberly Jay and John Walkup, co-founder of real estate data analytics company UrbanDigs.

What is a co-op apartment?

“[Co-op] owners do not actually own their physical [unit],” says Jay, who has over 15 years of experience selling property in Manhattan. When you buy into a co-op, you don’t own the title or deed to the apartment you’ll live in. “You get a proprietary lease that allows you to occupy a specific unit,” says Walkup, who is on the co-op board where he lives.

The building is owned collectively by a nonprofit corporation that determines how many shares each unit will have when the structure is converted into a co-op, according to CooperatorNews, a New York-focused publication. You, as a co-op owner, hold shares in that company. “Each unit is allocated a certain amount of shares that in total make up the corporation,” Jay says.

Walkup adds that “the size and amenities of your [co-op] apartment determine the number of shares you own.” Generally, two “identical units” will have the same number of shares, per CooperatorNews.

According to Cooperative Housing International, New York City is home to half of all the co-ops in the United States — co-ops are scarcer in non-metropolitan areas. Jay says that in places like New York, there’s also “a bigger buyer pool” for the co-ops.

How does a co-op work?

Each co-op has different rules and requirements, as determined by the co-op’s board. Jay says shareholders work democratically by appointing board members. A board typically has four officers (president, vice president, secretary, and treasurer). “[The board runs] the finances of the building. They hire the managing agent. They are the managers of the building,” Jay says. These individuals also set the co-op rules.

Co-op shareholders vote on some big-ticket issues. Jay points to an example of redoing the lobby as an issue that shareholders and the board would vote on. However, the board doesn’t put every item up for a vote. Jay says some boards will cut down on building workers, such as elevator attendants, without a vote if they’re trying to keep expenses down.

Co-op boards must operate within state corporation laws, and most co-ops have one-year…