Across Chicagoland, mid-rise and high-rise buildings make up a large part of the area’s housing stock. Chicago is the city that birthed the skyscraper, after all, and people here have always placed a significant value on homes that allow you to live in the clouds.

Among Chicago’s multi-family buildings, you’ll find two different types of ownership available. Broadly speaking, buyers in Chicago can explore two different types of community-based living – condominiums and cooperatives. 

Commonly shortened to condos and co-ops, respectively, these two types of homeownership differ in some significant ways, and each offers potential benefits and drawbacks to buyers. 

Let’s explore condos and co-ops – their similarities, their differences, and the role they play in Chicagoland’s housing market. 

Cooperatives (Co-ops)

The single biggest difference between cooperatives and condominiums comes down to ownership. With co-ops, buyers are not actually buying a specific unit within a complex. Owners don’t actually have a property deed. Instead, buyers purchase shares in a non-profit corporation, which essentially entitles them to live in a unit on the property, and access common areas. A larger unit may require purchasing more shares, and vice versa. 

True to their name, co-ops are cooperatively owned and managed by their residents, who all act as shareholders. Title to the building or complex is held by a corporation, which then grants leases to buyers. Generally, the day-to-day operations of a co-op are overseen by a governing board comprised of elected residents. 

This brings up another important thing to keep in mind: With cooperatives, buyers are not necessarily guaranteed housing. Instead, buyers must apply to live in the co-op, and have their application – which typically includes financial information and personal history – reviewed by the board, which then votes in or rejects potential new owners. Even if buyers can finance their purchase, they may be rejected due to other financial factors. 

Because of their unique financial and operational structure, co-ops also present a number of other things for potential buyers to consider. For instance? Fees are a fact of life when it comes to co-op ownership, and an owner may be liable for paying for utilities, building mortgage, and maintenance fees. When it comes to taxes, co-ops are taxed as single entities, with the property tax assessment being divided among owners. Often, this assessment is rolled into a resident’s regular fees, and paid off in increments throughout the year. 

One more thing to keep in mind? Co-ops are designed to create a feeling of close community. As a result, many co-ops often place strict restrictions on an owner’s ability to rent out their unit. Many co-ops do not allow buyers to rent out units at all, while others allow rentals on an extremely limited basis. 

Condominiums (Condos)

Unlike co-ops, buyers who purchase a condominium are buying a specific unit within a larger building, with this ownership also generally entitling the owner to access common areas and shared amenities. In other words? When you purchase a condo, you own a deeded piece of real estate. 

With that being said, condos are often considered to be easier to buy and sell than co-op units, as purchases and sales do not typically require the approval of other residents (though it should be noted that there are some cases where condo associations may exert a right of first refusal over some sales). It is also often easier to rent out a condo, though owners may face some restrictions from their condo association. Condos are typically overseen by a resident association, led by a board, which may contract with a management company for routine maintenance and upkeep of common elements. 

As with co-ops, condo owners must generally pay maintenance fees monthly, or at regular intervals throughout the year. These fees may also include special assessments, which are often levied for unexpected building maintenance or repairs. In terms of property taxes, condo owners are taxed individually, with individual owners responsible for the entirety of their bills. 

Finding What Works for You

Ultimately, it’s important to keep in mind that every buyer’s journey is going to be unique, and finding the right type of housing really means finding what’s right for you

For instance? In some cases, co-op apartments may be less expensive upfront than condos, with more routine fees and assessments over time. However, condos often offer greater flexibility, including more potential to let out your unit for income. At the same time, many co-ops may have down payment requirements, and restrict the loan to value ratio for buyers, while also charging transfer fees on top of local transfer taxes. For buyers who need to take advantage of financing, purchasing a condo may prove easier, as a result. 

When it comes to condominiums and cooperatives, there are a lot of moving parts and crucial variables to consider – and it’s only natural to have plenty of questions along the way. An experienced real estate attorney can help offer guidance and insight, while also ensuring that your real estate transaction moves along as smoothly as humanly possible. Having trouble with a co-op board or condo association? It may also be worth consulting with an attorney to explore all of your options. 

Have any more questions about any aspect of real estate law in Chicagoland? Don’t hesitate to get in touch with the attorneys and staff of the Gunderson Law Firm to keep the conversation going. At the Gunderson Law Firm, our team possesses unparalleled expertise and insight, underscored by long-term connections throughout Chicago’s real estate, finance, and insurance industries. We’re here to guide you through the legal process with ease, offering the advocacy you need, without the attitude you don’t.