Jeff Darrah, Esq. is a real estate attorney with District Title, A Corp., with offices in the Districtof Columbia, Maryland, and Virginia. A native of northern Virginia, Jeff Darrah studied foreign affairs at theUniversity of Virginia and law at The Catholic University of America. With District Title, A Corp., Jeff Darrah specializes in residential and commercial purchase and refinance transactions, short sale negotiations, and condo conversions.
Condominiums and housing cooperatives are forms of multi-unit housing that are often confused due to their similar appearance and lifestyles; however, they differ in a number of important ways.
- Condo units, like houses, are real property and the benefits of ownership of both are very much alike. For example, they are both individually owned, taxed, mortgaged, and transferrable by deed. Unlike houses, condo unit owners also own a percentage interest in the condo’s common elements, pay monthly maintenance fees, and elect a board of directors to manage the condo. Condos are the prevalent form of multi-unit housing in the DC metro area.
- Cooperatives (co-ops) are different from condos in that, instead of owning their individual units, co-op owners are actually shareholders in the corporation that owns the building, with a proprietary lease to live in a certain unit. Like condo owners, co-op residents elect directors, and pay monthly maintenance fees. However, co-op fees tend to be higher than those of a condo because co-op fees include the mortgage payments and real property taxes incurred on the building by the corporation. Co-op owners can benefit from tax deductions for their prorated share of mortgage interest and real property tax payments. Unlike condo purchasers, potential co-op shareholders must be interviewed and approved in advance. Financing is available for both condos and co-op purchases, even if fewer lenders provide financing for co-ops. While co-ops tend to be more restrictive on renting, co-ops have much higher rates of owner-occupancy compared to condos and many owners see this as a benefit. A potential purchaser and their real estate professional should be advised to research any building, whether condo or co-op, to weigh the specific costs and benefits. Consulting current owners and directors and reviewing the controlling documents and regulations are great places to begin.