What Is A Housing Co-op Anyway?
Housing Cooperatives are a legal entity that owns real estate with tenants being shareholders paying their share of the associated fees. Individual shareholders do not own the real estate they live in but are essentially shareholders of a corporation that owns real estate. Housing coops can take on a variety of forms.They can be one house with tenants occupying a bedroom and sharing things like a kitchen and commonrooms or they can be multiple residences similar to a condo or town homes with each tenant occupying a residence. The former is most common among students with coop housing resembling a dormtype situation whereas the latter is common for single adults and families in urban settings.
The advantages of being a coop shareholder are that you have much more control over your living space than if you were simply a tenant in an apartment that someone else owned. Also they allow the sense of ownership to people who would normally have trouble getting a mortgage loan as the cooperative itself as a legal entity can carry a mortgage. This makes it different from condominium ownership where each tenant is responsible for their own funding. Another advantage is that coop members share the real estate taxes. However sometimes seen as a downside coops do have occupancy agreements and a shareholders occupancy must adhere to these rules. This agreement essentially a lease also dictates who a shareholder can rent or sell to or even if they can sublet their unit at all. All coop shareholders are part of the cooperative association and have the option to serve on the board of directors which is usually a voluntary position unpaid. The advantage of this is that they can cocreate what the tenancy agreement consists of and therefore have more control over their living situation.
The board of directors serves as a governing body and in smaller coops can consist of all shareholders. In larger coops it isn’t uncommon for the task to rotate on a yearly or biyearly basis with members being elected by all the shareholders at an annual general meeting. Usually a Coop will hire a manager who will then hire contractors to carry out necessary services.
While some people just love coop housing others find it stressful to adhere to the tenancy agreement’s guidelines. For example there is a case of a mother moving out and leaving her youngadult daughter in her coop home only to have the other members consider her lease void. In other cases judges have ruled that the children of shareholders had the right to stay in their homes.
If you are considering buying into cooperative housing look over the tenancy agreement carefully. Consider getting to know some of the shareholders ahead of time and asking them what they like and dislike about the arrangement. Every tenancy situation including owning your own real estate has its challenges and rewards. The important thing is finding something that suits your unique needs.
About the writer:
About the writer: Virginia Wherland is an experienced Minneapolis real estate agent. Virginia and her team can help you find the property you need in the Minnetonka real estate market. Get more information at AssociatesRealty.net.
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