How to Buy a Co-op

When you buy a co-op, which is short for cooperative housing project, you are not the owner of your apartment. Instead, a corporation is the owner, and you are a stockholder. Besides a mortgage, you must also pay a monthly co-op fee. This allows the corporation to pay property taxes and take care of maintenance. It's similar to a condo, but in a co-op, the building's board of directors will have to vote and approve you as a member of the cooperative.

Work with a Realtor who has experience in co-op buying. He can assist you with finding properties with good histories, and he knows how to guide you through the approval process.

Hire a real estate attorney who is familiar with co-ops. You may need an accountant, since the co-op board has the right to request proof that you are financially stable.

Read carefully the co-op's Covenants, Conditions and Restrictions, also known as CC&Rs. Can you sublet your apartment? What about pets? What types of repairs does your CC&R cover? Have your attorney review the document, and don't hesitate to ask questions. Each state has a law stating how many days you have to study the CC&R. Make sure the document contains information on the co-op's bylaws and a current financial statement.

Prepare to come clean about your own financial picture. The co-op board has the right to ask for your recent tax returns, investment statements, salary information, a credit report and even a background check. You have to show you are responsible and can pay maintenance fees and taxes, as well as afford the mortgage.

Check out the zoning around the co-op. If it surrounded by other apartments buildings or condos, or if the close buildings are reputable business sites, you're probably OK. But if there is a lot of empty land or buildings in the neighborhood, read zoning laws and inquire about future developments. Sketchy neighbors can bring down the value of your new home.

Realize the co-op board makes the final decision about whether you get the property or not. By law, the board cannot discriminate against you; however, it is not required to explain a rejection.


  • Ask the co-op board about a flip tax. Some co-ops assess a charge if you sell your apartment within the first few years of ownership.