We recently purchased a share in a stock cooperative. Do we own
A stock cooperative is a common interest development in which a
corporation holds title to the real property and improvements and
all of the shareholders receive a right to exclusively occupy a
portion of the real property.
The interest of an owner
in a stock cooperative, whether evidenced by a membership certificate
or share of stock, is an interest in real property. Top
We have a membership in a stock coop and are having great difficulty
in refinancing our apartment. Are Banks, Savings Banks and Credit
permitted to make loans on coops?
Yes. They are authorized to do so, but most will not make such loans.
Comparable condominiums are worth substantially more money and are
easier to sell. Consequently, lenders prefer condominiums to coops. Top
WHY A COOPERATIVE?
Why would a developer build a cooperative instead of a condominium building?
A developer probably would not make such a decision. Most cooperatives are not developed from the ground up. Nearly all cooperatives in California were created by converting apartments or mobile home rental parks to cooperatives.
Developers convert apartments and mobile home rental parks to cooperatives instead of condominiums because the properties don't meet the building standards for condominiums, but notwithstanding, it is still profitable for the developer to convert to a cooperative.
All things being equal, condominiums are generally worth 20% to 40% more than a cooperative and are much easier to sell. In addition, more attractive loans (interest rates and terms) are available for condominiums.
Sometimes, it is possible to convert a cooperative to a condominium. While such opportunities are fairly rare, it is almost always financially beneficial for the members of a cooperative to convert if it is possible. Top
Permission to reprint our HOA Questions and Answers is granted provided Michael T. Chulak & Associates (MTCLaw.com) is credited as the source.