Welcome to another year at the
Real Estate Think Tank. I enjoy writing about real estate and am thankful that
I have this forum to share my thoughts on the subject. With that said, let’s
get into Cooperatives.
A Cooperative, also known as a Real Estate Cooperative or Co-op, is a form
of real estate ownership in which owners purchase shares in a
corporate entity that owns a building. This entity is usually called an
Apartment Corporation. Despite the name “Apartment Corporation,” a co-op can be
both residential and commercial. Although residential co-ops, known as Housing Cooperatives, are more prevalent, commercial co-ops are not uncommon.
In exchange for the purchase of
shares in a co-op, each owner is given both an ownership interest in the Apartment
Corporation, usually in the form of shares of stock, and a proprietary lease.
The proprietary lease entitles each owner to occupy a certain portion of the building
exclusively and confers most, if not all, of the rights of property ownership
over the designated space, called an apartment.
Since the Apartment Corporation
owns the building and not the owners, owners in a co-op are referred to as
shareholders. Furthermore, shareholders do not technically own real estate or
real property, but instead own shares, which are considered personal property.
This distinction has certain legal ramifications that are noteworthy, but beyond the scope of this post. The ownership characteristics of a co-op, however, are also very interesting.
