Benefits of Co‐op Living
Housing co-ops are a uniquely flexible housing tool, providing many opportunities and benefits to their members, both economic and social.
- Low “Closing” Costs: When a person buys or sells (transfers) a co-op unit, the person doesn’t receive title to real estate, but instead buys a share of stock in the cooperative corporation that owns the real estate. There is no need for a new title search or title insurance. For this and other related reasons, the closing costs involved in purchasing a coop unit are generally lower than if you were to buy a house or condominium.
- Stable Payments: Housing cooperatives can secure long-term, fixed-rate mortgage financing through several different federal programs. (For example, LLC secured a mortgage through HUD in 2009.) For a co-op, the portion of a members’ Monthly Carrying Charge (MCC) that pays principal and interest on this kinds of mortgage remains fixed over the term of the loan, no matter how often units change owners. Consequently, over time, monthly expenses remain stable and predictable. NOTE: Our current agreement with HUD requires us to raise our MCC a minimum of 2-3% per year, well under market rates.
- Homeowner Tax Advantages: The interest and real estate tax portion of a housing cooperative’s mortgage payment enjoys the same beneficial tax treatment as the interest expense on a conventional single family home or condo. The co-op passes these tax benefits on to its members. A statement is given to all member each year to help figure this benefit into your taxes.
- Equity Security: Because we are a Limited Equity Ownership Cooperative, your investment in your cooperative unit is not exposed to the ups and downs of the housing market. Should you decide to sell your unit in the future, your selling price (“Transfer Value”) includes the Transfer Value you paid, plus any approved capital improvements you made (working with the Design Committee), plus any increase as determined by our Bylaws (Article 9). Many members compare their Transfer Value to a safe investment or savings account that will come back to you when you sell your unit.
- Joint Financing: The cooperative business structure allows residents to borrow collectively under a single mortgage (often called a blanket loan), borrow separately under individual mortgage loans (often called “share loans”), or use some combination of the two financing addition, member-owners share the cost of mechanical system and building repairs.
- Limited Liability: Individual members of the co-op are not personally liable for loans (such as a mortgage) taken out by the cooperative-corporation on behalf of its members.
- Operation at Cost: In a cooperative, occupancy charges are equal to the actual cost of owning and operating the property. In a rental, rents go up far faster than actual costs because the landlord is in business to make a profit. Our cooperative-corporation keeps the profit that a landlord would pocket.
- Overall Value: A cooperative maximizes benefits to its members. A rental maximizes profits to the landlord.
- Self-Management: Cooperative members approve legal documents, determine policies, approve new members, select the management company (if one is used), approve the budget and set the priorities for maintenance and improvements.
- Community Control: Community concerns as well as individual benefits are taken into consideration in all decisions. Co-op members also have the right (within legal limits) to approve new buyers and so have more leverage in enforcing house rules than is typical in a condominium or town home association.
- Leadership Development: Serving on a cooperative board, committee, or special task forces provides members with unique opportunities to develop and practice their community leadership skills.
- Democratic and Civic Participation: The cooperative living experience is designed to empower members, helping them build life skills and confidence. Studies show that cooperative members are more active in their communities and more likely to vote.
- Flexibility to Change Units: As household size or economic status changes, co-op members have the flexibility to change units within their cooperatives. Changing units is called an Internal Transfer undertaken in accordance with bylaw and board approval, and involves transferring share ownership and occupancy agreements. Changing units in a co-op is not a real estate transaction which saves everyone money and time.
- Enhanced Security: Because neighbors know each other, many members feel more secure in their homes. A locked building and the upper floors make our building more secure.
- Opportunities for Strengthening the Social Fabric of the Community: Cooperatives are about living in community with other like-minded individuals. As such, co-ops provide natural opportunities for members to form friendships, pursue common interests and, ultimately, strengthen their community.
- Lower Rates of Delinquency and Default: Studies reflect that co-ops have lower rates of delinquencies and foreclosure than rental buildings.