What are Cooperative Units or “Co-Ops”?

A Housing Cooperative

A housing cooperative, commonly called a “co-op,” is a type of residential housing option owned by a corporation where the owners do not own their units outright. Each resident is actually a shareholder in the corporation itself. Essentially, a co-op is a building jointly owned by a corporation consisting of all its residents. You aren’t purchasing a piece of property when you buy into a co-op, rather, you are buying a share in a nonprofit corporation that permits you to live in the residence.

How Does Housing in a Co-Op Operate?

Co-ops are nonprofit organizations that consist of a board of directors, shareholders, and a co-op association. The board of directors is typically responsible for developing guidelines, policies, and making decisions that are in the best interest of the co-op. The shareholders are the individuals who buy into the co-op and own a portion of the company that owns the building in which they reside. And the co-op association operates in a managerial capacity by managing and collecting membership fees.

Which Housing Units Are Permitted to be Co-Ops?

Typically, co-ops are apartments located within large buildings. However, a co-op can also be a townhouse, single-family home, mobile home, or duplex. Again, residents of co-ops don’t physically own the apartments or units. However, they must still obtain insurance coverage for their personal property and pay recurring dues to the co-op association.

What Types of Co-Op Structures Exist?

There are three types of co-op structures: market rate co-ops, limited equity co-ops, and group equity co-ops. These types of co-ops often affect the procedure for re-selling shares. 

In a market rate co-op, residents can sell their shares to another buyer at the current market value. Limited equity co-ops limit how much a shareholder can profit when selling their shares and often try to offer affordable housing to initial residents. Lastly, group equity co-ops are designed so shareholders don’t build equity at all, and instead get their initial capital contribution back when they move out. This last method is similar to renting an apartment and putting down a security deposit.

What’s the Difference Between a Co-Op and Condo in Florida?

People often think of condos and co-ops as similar housing units. However, they do not operate in the same manner. The most significant difference between the two is in property ownership. One does not “buy” a co-op; instead, one becomes a shareholder in the corporation that owns the co-op. The board of a co-op will often have to approve a new individual as a shareholder, and the shareholder must abide by the corporation’s rules. Further, a purchaser of a co-op is not building equity in the property they purchase, so they are often prohibited from making changes to the inside of their unit beyond typical maintenance.

Condominiums, on the other hand, are treated as real property. When you purchase a condo in Florida, you own your individual unit. Further, you have an undivided interest in the common areas of the building, which include areas like the parking garage, pool, basketball court, etc. Similarly to a co-op, you must abide by the rules and regulations set forth by a condo association.

Is Ownership of a Cooperative Unit Real Property or Personal Property?

Unlike a condo, co-ops are not considered real property from a legal or tax perspective. When you buy into a co-op, since you become a shareholder in a corporation that owns the property, you are technically the owner of personal property. Rather than receiving a deed, buyers receive stock certificates which are considered personal property. Often, the stock certificate grants each shareholder a limited lease on one living space in the building.

EPGD Business Law is located in beautiful Coral Gables. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Eric Gros-Dubois

Founding partner Eric Gros-Dubois established EPGD Business Law in 2013. With over a decade of experience expanding the firm and leading it to its current success, Eric now primarily manages the corporate division of EPGD. Given Eric’s educational background, holding both a JD and MBA, combined with his own unique experience of starting a business from scratch and growing it to a multi-million dollar firm, he brings a specialized and invaluable perspective to those seeking legal assistance for themselves and their businesses. Having now instilled his same values in our team of skilled corporate associates, Eric leads a firm that is always ready, willing, and equipped to handle any and every legal matter that a business owner may have.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.

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