An apartment building or a group of dwellings owned by a corporation, the stockholders of which are the residents of the dwellings. It is operated for their benefit by their elected board of directors. In a cooperative, the corporation or association owns title to the real estate. A resident purchases stock in the corporation which entitles him to occupy a unit in the building or property owned by the cooperative. While the resident does not own his unit, he has an absolute right to occupy his unit for as long as he owns the stock.
Cooperative housing is a different type of home ownership. Instead of owning actual real estate, with cooperative housing you own a part of a corporation that owns the building.
Cooperative housing usually includes an apartment building or buildings. Instead of buying an individual unit, the residents are a corporation that owns the entire building. Each shareholder is then entitled to reside in a unit. As long as the shareholder owns the stock, s/he can live in that unit.
It is typical to have a board of directors with cooperative housing. This board of directors is usually a bit more powerful than that of a condominium association. They can limit who is allowed to live in the cooperative housing if there is a sale of stock. That may make it harder to move from cooperative housing since it potentially can be hard to sell your share.
When living in cooperative housing, the shareholder helps pay for the mortgage, and maintenance of the entire building. The interest is still tax deductible, just as it would be with owning a condominium. Also, the shareholder is paying his/her portion for upkeep of the building and maintaining the amenities.
A big difference between condominiums and cooperative housing is who is attracted to them. Condominiums tend to be for first-time homebuyers, those in transition, and buyers looking for investment or rental properties. Cooperative housing is usually a little more exclusive. The board of directors can be unwilling to allow someone to purchase stocks in the corporation if s/he does not plan to live there. The board of directors usually has a say in who becomes shareholders.
Cooperative housing can be an interesting choice for home ownership. Anyone interested should take special care in learning as much about the building, by-laws, and residents as possible before becoming a shareholder.