Cooperative Corporation
Definition and meaning of Cooperative Corporation in real estate.
A cooperative corporation is a unique legal entity that holds the title to a multi-unit residential building and issues shares of stock to its residents, giving them the right to occupy individual units. When a person buys into a cooperative, they do not own real estate directly; instead, they own shares in the corporation and hold a proprietary lease.
In more detail
The corporation is governed by a board of directors elected by the shareholder-tenants. This board manages the building, sets house rules, and approves or rejects prospective buyers based on financial reviews and interviews. The corporation typically holds a master mortgage, which covers the entire property, and pays the building's property taxes.
Shareholders pay a monthly maintenance fee to cover their portion of these shared operating costs, taxes, and mortgage payments.
Key facts
| Category | Legal, Titles & Closing |
|---|---|
| Ownership type | Shareholder status in a corporation with a lease |
| Governing body | Board of directors elected by shareholders |
| Financial obligations | Monthly maintenance fees for building operations |
A prospective resident buys stock in a Manhattan cooperative corporation, which issues them shares and a proprietary lease for apartment four-B.
Frequently asked questions
Do you own real estate when you buy into a cooperative corporation?
No. You own personal property in the form of corporate shares and a proprietary lease that grants you the right to live in a specific unit of the building.
Why does a cooperative corporation board interview buyers?
The board conducts interviews to review the financial stability of prospective buyers and ensure they will follow the community's cooperative rules, protecting the financial interests of all shareholders.