"Planning to buy an apartment? One of the first decisions you'll have to make (after choosing the basics like neighborhood and number of bedrooms) is whether to purchase a condominium or a cooperative unit - a co-op. Sure, the two types of apartments may look identical as you open the entry door. But they are very different real estate offerings, and the form of ownership, method for financing a purchase, and application process vary substantially between the two."
"When you purchase a condominium, you receive a deed, and while you own the interior of your unit individually, you share ownership of the building and its amenities with the other unit owners. With a co-op, however, the building is owned by a cooperative corporation, and purchasers receive stock in that entity, as well as a proprietary lease that gives them the right to live in their unit."
"Condominium purchases are financed by mortgages, just like single-family homes. The unit itself serves as collateral for the promissory note. When financing a co-op, the owner pledges his or her lease and shares to the lender, and a document called a UCC-1 Financing Statement is publicly filed to secure that lien. Glass said that only "a handful" of banks will finance co-ops and that they typically require a higher down payment than a condominium loan."
Most multifamily for-sale units in Greater Boston are condominiums, while co-ops are more common in New York City. Condominiums provide individual deeds for unit interiors and shared ownership of common building elements and amenities. Co-ops are owned by a cooperative corporation; purchasers buy stock and receive a proprietary lease granting the right to occupy a specific unit. Condominium purchases use traditional mortgages with the unit as collateral. Co-op financing involves pledging shares and the lease, filing a UCC-1 Financing Statement, and often faces limited lender availability and higher down payment requirements.
Read at Boston.com
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