Stock Cooperatives (Co-op) Specialists Since 1987
When it comes to buying or selling a stock cooperative (co-op) anywhere in Southern California, you are in good hands when being represented by the real estate agents with Pacific-Realtors.net. The owner of our firm, Michael Chulak, has managed cooperatives and has represented cooperatives as an attorney for more than 22 years. Michael has also provided valuable training to several of our agents regarding California cooperatives.
In California, a stock cooperative, co-op, or housing co-op, is defined as a common interest development in which the buyer acquires a separate interest which is the exclusive right to occupy a portion of the property, and a share of shock or a certificate of membership, in a non-profit corporation that holds title to the property. All of the shareholders or members have the non-exclusive right to use the common property, subject to corporate bylaws and an occupancy agreement or proprietary lease. By law, coops are real estate which means an owner has the right to deduct interest and real estate taxes paid on their federal and state tax returns.
Housing cooperatives are mostly apartments, but many are mobile home parks. There are more than 30,000 stock cooperatives in California. Some are age restricted, most are not.
Cooperatives are unique in that unlike condominiums, a co-op board can screen buyers to determine whether they qualify financially. Notwithstanding, co-op boards must comply with all state and federal fair housing laws. Also, unlike condominiums, cooperatives almost never have recorded CC&Rs. All covenants, conditions and restrictions are set forth in the corporate bylaws and the occupancy agreement/proprietary lease.
Cooperatives are not as favored in the real estate market as condominiums because they are more difficult to finance and they are generally less understood. Consequently, cooperatives sell for less than comparable condominiums.
When a buyer acquires a cooperative, whether it is an apartment or mobile home, the buyer acquires a share in the non-profit corporation and an occupancy agreement or proprietary lease, as opposed to a grant deed. If the buyer requires a loan, the loan is a share loan, as opposed to a real estate loan or mortgage. The lender accepts the stock or share plus a conditional assignment of the occupancy agreement/proprietary lease as security for the loan as opposed to a deed of trust or mortgage.
Buyers and sellers of co-ops should always utilize the services of an independent escrow company and an experienced real estate agent.
Pros and Cons of Purchasing a Stock Cooperative