A cooperative, commonly called a co-op, is a form of homeownership in which buyers purchase shares in a corporation that owns the entire building rather than acquiring title to an individual unit. In exchange, each shareholder receives a proprietary lease granting the right to occupy a specific unit.
Co-ops are especially prevalent in urban markets like New York City and operate very differently from condominiums. The corporation — governed by a board of directors — sets rules for financing, subletting and resale, and prospective buyers must typically pass a board approval process before purchase. Many co-ops impose restrictions on financing terms, minimum down payments and allowable lenders, which significantly narrows the buyer pool.
These restrictions directly affect marketability and value. Appraisers must select comparables from within the same co-op structure when possible, and lenders must verify that the building and its financing terms meet agency or investor guidelines before underwriting a co-op loan.