Co-ops Are Different

April 21, 2009


Lake Shore Drive Is Home to Many of Chicago's Co-ops

Lake Shore Drive Is Home to Many of Chicago's Co-ops

There aren’t many co-ops in Chicago, but occasionally one comes up in an MLS search and my buyers always ask about them. I know of several along Lake Shore Dr and in Hyde Park, one in Ravenswood, and a few in Rogers Park.

Until the most recent condo boom, co-ops were the most prevalent form of ownership in Manhattan, but now the condo buildings have taken over a large part of the New York real estate market. The history of co-ops in New York was well documented in Michael Gross’ book 740 Park: The Story of the World’s Richest Apartment Building.

Why Do Buildings Set Up as a Co-op?

Each co-op building has its own individual history, but many were originally apartment buildings. At some point when a landlord wanted to sell a building, the tenants would buy the building as a cooperative group (and often at a discounted price) in order to avoid being forced out by a new owner who may raise the rent, convert to condominiums, or tear down the structure.

Another reason why co-ops were formed was in order to have more control over who your neighbors are. At one time, co-op boards used their power to reject prospective owners based on race or social status. Today, co-op boards can reject a prospective owner as long as they do not discriminate based on age, sex, race, or marital status.

In a Co-op You Own Stock

Co-op’s are a different form of ownership than condos in several ways. Condo owners own their individual unit and have a percentage share of ownership in the building’s common areas based on the size of their unit. When you buy in a co-op, you are buying shares of stock of a corporation that owns the entire building. The number of shares you own is based on the size of your unit. When you own a condo, you pay taxes on your individual unit. A co-op has one tax bill for the entire building that is paid as a group and is typically included in your monthly assessments.

Co-ops Have Different Rules

Every communal living has rules and regulations. Many condominium buildings and cooperative buildings have similar rules. However, it’s not uncommon for a co-op to have more rules than a condo. A buyer with an accepted offer will need to meet with the co-op board before they close, and the board has a right to refuse to sell them stock in the company that owns the building. Another rule that makes co-ops unique is that they are typically 100% owner occupied. That means that if your situation changes, you can’t rent your home out.
Co-ops generally have a lower purchase price and much higher assessments. The assessments include much more (for example, taxes, etc). Many co-ops require a higher down payment than condominium loans because you are receiving a different type of loan that only certain banks can provide. Many co-op boards require a higher down payment than what the bank requires because they want to ensure that their owners are financially capable of this purchase.

Co-ops can often be found at a good price, and with that good price comes community. There is pride in co-op owners, and many residents occupy their units for longer than the average condo owner.

Whether you are buying a condo or a co-op, be sure to learn the specific rules and regulations for the building you are interested in.

We would like to thank John Beagle for kindly sharing today’s photo via the Creative Common’s License.

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About Katie Mischka

Katie Mischka is a respected and experienced broker with Koenig & Strey GMAC. A Chicago native, Katie has a wealth of knowledge about Chicago's neighborhoods and their history. Katie works with buyers and sellers and has experience selling condos, single family homes, townhomes, land, luxury homes, short sales, and relocation. She has been quoted in Crain's Chicago Business and Chicago Agent Magazine. Katie loves selling real estate and her clients are her priority! For more information, visit Katie's website: (, email her ( or follow her on Twitter (@katiechicago).

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