What's the difference between a co-op and an HOA or condo?
Reviewed by the OurHOA team · Updated July 2026
In a co-op you own shares in a corporation and a lease, not real estate. That one difference changes your financing, your monthly bill, and who gets to approve your buyer.
You do not get a deed
This is the whole thing, and everything else follows from it. In a planned-community HOA you own your lot and the house on it. In a condominium you own your unit plus an undivided share of the common elements, and you have a deed either way. In a housing cooperative you own no real estate at all. The corporation owns the building, and you own shares in that corporation, along with a proprietary lease that gives you the right to occupy a specific apartment for as long as you hold the shares and follow the rules. Legally you are a shareholder and a tenant at the same time. People call it buying an apartment because that is what it feels like, but the paperwork at closing is a stock certificate and a lease, not a deed.
The monthly bill is not comparable to condo dues
New buyers compare a $1,900 co-op maintenance charge to a $700 condo common charge and conclude the co-op is a bad deal, which is usually the wrong read. Condo dues cover operating costs and reserves. Co-op maintenance covers those plus two things a condo owner pays separately: the property taxes on the building, and the debt service on the building's underlying mortgage. The corporation owns the building, so the corporation carries the tax bill and the loan, and your maintenance is your share of both. That is also why a meaningful portion of co-op maintenance is generally deductible on your own return, since it passes through mortgage interest and real estate taxes. Estimates commonly land somewhere in the 40 to 60 percent range, but the number is specific to your building and the corporation should tell you the actual figure each year. Compare the two structures on all-in monthly cost, not on the maintenance line.
The underlying mortgage is a risk condo owners do not have
Ask about the underlying mortgage early, because it has no equivalent in an HOA or a condo. The corporation can borrow against the building, and many do, sometimes to fund a big capital project instead of levying an assessment. That is not automatically bad. What matters is the size of the loan relative to the building's value, the interest rate, and the maturity date. A building with a large balloon payment coming due in a soft lending market is a building where maintenance is going to jump. And because there is one asset and one borrower, the exposure is shared in a way it is not in a condo: if a condo owner two floors up stops paying, that is a delinquency the association chases. If enough co-op shareholders stop paying and the corporation cannot cover the mortgage or the taxes, everyone in the building has a problem, including the shareholders who paid on time.
Financing is a share loan, not a mortgage
You are not buying real property, so a conventional mortgage does not fit. What you get instead is a share loan secured by the stock and the proprietary lease. Fannie Mae buys these and publishes eligibility rules for them, so the product is standard, but not every lender originates them and the ones that do underwrite both you and the building. Expect the co-op itself to be reviewed, and expect the board to layer its own financial requirements on top of the lender's. Many co-ops cap how much of the purchase price can be financed, often at 75 or 80 percent, and some prewar buildings allow no financing at all. Boards also commonly want to see liquid assets left over after closing and a debt-to-income ratio tighter than what a lender would accept. Two people with identical incomes can both be approved for a condo and only one of them approved for a co-op.
The board approves your buyer, and usually does not have to say why
In an HOA or condo, the association's role at resale is mostly administrative: produce the estoppel or resale certificate, collect what is owed, and in some communities exercise a right of first refusal that is rarely used. A co-op board interviews your buyer and votes. It can turn down a financially qualified applicant, and in most places it does not have to give a reason, which is exactly what makes rejections so hard to challenge. The limit is antidiscrimination law: a board cannot reject someone because of race, religion, national origin, sex, familial status, or disability, and state and local laws often add protected categories such as source of income. The opacity has drawn legislative attention, particularly in New York, where bills requiring boards to state their reasons have been introduced repeatedly and Westchester County adopted a disclosure law requiring co-ops to be upfront about their financial standards. If you are selling, the practical move is to price in the delay and put a board-approval contingency in the contract so a rejection does not cost your buyer their deposit.
Selling, subletting, and getting out
Two more differences show up when you leave. Many co-ops charge a flip tax, a transfer fee paid at closing that is usually the seller's cost and is set as a percentage of the sale price, a per-share amount, or a cut of the profit. It exists to fund the building without raising maintenance, and it is a real number to plan for. Fannie Mae's share-loan rules put conditions on flip taxes, including a limit around 5 percent of value and an exemption for a lender that takes title through foreclosure, so a building's flip tax has to be drafted with financing in mind. The second difference is subletting. Condo associations can regulate rentals and increasingly do, but co-ops tend to be much stricter, and plenty of buildings allow subletting only after you have lived there a few years, only for a limited number of years, and only with board approval. If your plan involves renting the place out someday, read the sublet policy before you read anything else.
Figuring out which one you are actually in
If you are not sure, look at what you signed at closing. A deed means condo or planned community. A stock certificate and a proprietary lease mean co-op. Your tax bill is another tell: a condo or single-family owner gets a bill in their own name, while a co-op shareholder generally does not, because the building is taxed as a whole. Co-ops are most common in New York City by a wide margin, though they exist elsewhere, including limited-equity co-ops built to keep housing affordable, where resale prices are capped by formula and the upside is deliberately limited in exchange for a lower entry price. Whichever structure you are in, the documents are what govern, and the questions worth answering before you buy are the same: what does the monthly charge actually cover, what does the entity owe, what are the reserves, and what does it take to sell. For the small planned communities and condo associations that run themselves without a management company, keeping those documents, budgets, and records in one place instead of scattered across board members' inboxes is what OurHOA is built for. None of this is legal or tax advice, and cooperative law, board approval rights, and the deductible share of maintenance vary by state and by your building, so have a real estate attorney and an accountant look at the specifics before you commit.
OurHOA is the friendly, affordable way self-managed communities keep dues, records, and reminders in one place. See how it works.
These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.