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Which Is Best For You: Co-ops vs. Condos

You get shares in a corporation that represent your proportionate ownership interest, and a proprietary lease. You  get your own homeowner’s deed and tax lot as you would if you were buying a house.
As a result you are both a tenant and an owner, and get the benefit of lots of laws meant to benefit renters. You own outright so most renters’ laws don’t apply.
The property you own can be real or personal, depending on the nature of the transaction. The property you own is real for all purposes.
Board can reject for no reason or any reason so long as the real reason isn’t discrimination. Board only has a right of first refusal so, generally, it can’t reject you outright, but can only buy the apartment if it doesn’t like you or your finances, which it rarely does.
Board gives full court press scrutiny to buyer finances. Board review of buyer finances is generally less demanding.
Usually owns, but may lease the land it sits on, which can become a problem if the lease escalates or nears expiration. Must own the land it sits on, and you own an undivided proportionate share.
Usually has an underlying mortgage, whose terms (e.g. interest rate, duration, interest only or self-amortizing) may have a significant impact on the building’s finances. Does not have an underlying mortgage. (Any mortgage that existed has to be paid off before the sponsor sells the first apartment.)
Legal structure makes it easier to borrow. Harder to borrow for capital needs, despite legislation to address the problem.
Board can usually spend or borrow without prior shareholder approval. Board usually can’t spend or borrow above set limits without owner approval.
Virtually all expenses, including mortgage interest and/or principal and real estate taxes, are  shared with fellow owners, and paid via monthly maintenance, and assessments, if any. Fewer expenses are shared and common charges are lower because there is no mortgage to repay and you pay your own real estate taxes.
The flip side is that you get bigger tax breaks in co-ops because you can deduct your proportionate share of the building’s mortgage payments and real estate taxes, which can make 50% (or more) of your maintenance payments tax deductibible. Since condos have no underlying mortgage, there are no interest payments to deduct.
Proprietary lease and bylaws govern. Bylaws govern.
Board can pass or amend house rules. Board can pass or amend house rules.
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