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The Difference Between a Condo, Co-op, and HOA


The confusion around the condo, coop, HOA difference has subsisted for as long as these property types came into existence. Even some experienced real estate professionals at times fail to understand the differences between these popular types of housing setups. And many people use these words interchangeably. 


There exist key differences between these properties in terms of home-ownership, characteristics, and governance. Understanding how these properties differ from each other, in addition to taking the condo board certification Florida course, can help you become a competent condo board member. Read the Florida condominium board certification requirements to see if you are a good fit.


Let’s go over the main difference between a condo, co-op, and HOA. 


Condo


A condominium is a housing unit where the owners own their respective units, besides jointly owning the building’s common areas and amenities. Examples of the mutually owned areas include the grounds, elevators, shared pool, park, clubhouse, and everything in the building except for the individually owned units. 


The owners are responsible for the maintenance and care of the jointly-owned areas. But this doesn’t mean each owner has to participate in the upkeep of the common amenities personally. In most cases, a condo association is formed to look after the maintenance, improvement, and development of the joint areas. The association organizes resources and administers these activities. 


The homeowners become members of the association and then elect some of the residents as the board of directors (BOD). Condos charge fees from all of the residents to undertake maintenance of the common spaces and facilities. In most cases, condominium associations charter management companies to execute the necessary upkeep and development activities. 


The condo association makes rules, regulations, and policies for the residents. The rules can cover things like quiet hours, membership fee collection, and external decorations. 


Co-op


Co-ops came into existence long before condos came into being. While these buildings look as if they are the same as condos, they have different ownership models and governance. Coops are not considered real properties. Unlike a condo where residents own their respective units, cooperative housing residents do not own the units they live in. Instead, each owner owns the entire building, including all of the homes. 


The co-op residents own the entire multi-unit building through a corporation. The owners are shareholders of the corporation and seemingly own the units they live in. However, legally they live in their individual apartments on lease. 


A co-op’s board is responsible for the building’s care and upkeep. The residents pay monthly fees to the corporation, and most co-operative boards hire management companies to look after these maintenance tasks. But the fees for coops are higher, as it includes real estate taxes and hazard insurance charges. The fees might also shoot up if the co-op is repaying any loan taken to construct the building. This is not the case with condos.


Next, buying a home in a co-operative housing is difficult because most financiers are reluctant to lend money for obtaining ownership of a co-operative. For this reason, there is no surety that you will secure a mortgage from a lender. Moreover, the co-op board will likely vet you to decide if you can be a shareholder of the co-op and buy ownership in the property. 


HOA


A homeowners association HOA may look like a condominium, but it is a free-simple association that manages maintenance and developments in a shared property. In other words, it is an association of homeowners who live in a planned community.


The key difference between a condo and HOA is that the latter’s residents fully own the structures of their homes and the lands they are built on. However, they don’t legally own the common areas. 


In other words, the HOA residents get home ownership for their individual houses, unlike a condo where the residents own their houses plus the common areas and facilities. And there are no restrictions or limitations on HOA residents’ ownership of their properties. 


Despite not having a share in the common spaces, residents are still bound to follow some usual rules and regulations put forth by the HOA. While the residents are also responsible for the upkeep of the shared spaces, the rules are not as strict as those for condo ownership. 


Second, it is easy to get a mortgage for buying a home in an HOA than a condo. In the case of a condo, the financier has to consider the risks involved in lending on the joint space and facilities that are part of condo ownership, besides the individual unit. And as stated above, securing a mortgage for buying a home in a co-op is more difficult (more than that for a condo) because you do not become the legal owner of the house. 


Final Thoughts


Never assume that a condo, co-op, and HOA are different names for the same type of property. Be sure to understand the major difference between the different kinds of real estate setups. They have various advantages and disadvantages, and you must know the differences to become a capable member of a condo's board.

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