Although the CO-OP (or cooperative) form of ownership is not very common in this area, there are still several in the Seattle area – most dating back to WWII or earlier. In many ways, a CO-OP seems to operate like a condominium but is a very different form of ownership. A condominium has each unit owned, fee simple, by a different person. The monthly dues cover the individual unit’s share of expenses for the maintenance of the common areas and management fees, if any.
In a co-op, the entire complex is owned by one entity as a corporation and the individual units are “owned” in the form of owning shares in the corporation. Because one entity owns the corporation (the co-op), they may have a mortgage on the premises. When you buy into a co-op, you may pay less for the unit than if it were an equivalent condominium but your monthly dues (maintenance fee) are roughly double that of the condo. This is because you are paying for the
maintenance of the common areas, etc. like a condo but also your unit’s share of the monthly mortgage payment that the corporation has on the property. As time goes on, this mortgage is paid off and the owners are only responsible for
similar costs to that of the condo.
One benefit of this higher monthly maintenance is that the unit owners can deduct the portion of their maintenance that goes towards the corporation’s mortgage payment. The rules and regulations in a co-op are also much more restrictive. In a condo, you can sell to whomever you choose, paint your interior walls any color you like and you can rent to whomever you want as per the condos CC & Rs. In a co-op, their “Co-op Board” regulates everything about your use of the property including whom you sell to, what their line of work is, what they earn (even if they can get a mortgage!). The Board can define anything other than protected class or discrimination items. Although many co-op owners get along very well and have no problems with these issues, the very nature of a co-op allows for this restrictive behavior