What's the Difference? Condo vs. Co-op

The difference between a condo and a co-op is what you actually own. A condo is a piece of real property. You own the space itself. Co-op dwellers own a share in the corporation that owns the housing units.


A condominium is often defined as beginning with the paint on the walls. That paint, and everything within it, belongs to you. What you won’t have in a condo is fee simple ownership, an interest in a property with no restrictions or limitations. The land and common areas are owned by all of the unit owners, and are usually governed by a homeowners association or board. So if you want to add a kitchen island, go for it. But if you want to do some soundproofing by taking your shared wall down to the studs and adding insulation, you may have to go through the proper channels. You can get a traditional mortgage to buy a condominium, since the unit can be used as collateral.

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A co-op is a group effort, and while it may be less expensive than a condo, you might have a tougher time buying a share, because you’ll have to get through the governing body. You’re joining a club, in a sense, and some clubs are more exclusive than others. In competitive markets like New York City and San Francisco, getting approved isn’t as simple as having the money to pay for your share. Many co-op boards will dig deep to find out everything they need to know to assess you as a potential neighbor. Even celebrity is no guarantee; some of the most famous people have been rejected by co-ops. If you’re applying to buy into a co-op, you might want to clean up your Facebook page, just in case. If you need a loan to buy shares in a co-op, you won’t actually be getting a mortgage, since the unit can’t be used as collateral. You’ll be getting a share loan. Many co-ops do not allow for the use of shares as collateral, so these loans can be tougher to get.

As for which is the right choice for you, that will depend on your preference, your finances, the market, and how easily you can charm a co-op board!