A Condop? Whats that? Is it For Me?
A: A Condop is the marketing term given to a Co-op that has rules and by-laws similar to that of a Condiminium. The freedom to sublet, put only 10% down at closing, and easy board approval are characteristics of a Condo that have been adopted by a Co-op. The subsequent term to define this type of entity has been "A Condop". Closing costs will be similar to that of a Co-op (significantly lower than Condo's) and you will be buying shares in a corporation rather than real property. *Although you are technically buying a Co-op (shares of stock), I will refer to a Condop as a Condop throughout this post.
Buying a Condop definitely has its advantages if you are lucky enough to find one in the neighborhood and price range that you require.
Financial: The closing costs will be much lower than if you were buying a Condo. Transaction fees usually end up being a lot more than most think at closing, and if your buying a Condo they could be twice as much as if you bought a Co-op. Talk to your real estate attorney before signing the contract to get a estimate of your closing costs.
Freedoms: Just like a Condo, a Condop allows you to sublet your property without restrictive policies; such as, 'Must Live-in 2YRS & then can Rent out for 2YRS' which happens to be a frequently occuring policy in Co-op's. Other freedoms condop's generally offer are no pied-a-terre policy, use of co-signer or guarantor, and parents buying for their kids.
Board Approval: Condop's usually take on the NO BOARD APPROVAL or EASY BOARD APPROVAL policy of only looking into a buyer's credit and criminal history when reviewing for approval. On the other hand, a Co-op Board process is very tough with customized financial and personal policies lowering the pool of potential buyers that the property can be marketed to.
Required Down Payment: Most Condop's take on the 90% financing allowed policy that is so common in Condominium's. Allowing a buyer to finance up to 90% of the purchase price is a big selling point of Condo's and opens up a larger audience of buyers that can possibly purchase the unit. Co-ops that require more than the traditional 20% down are restricting the group of people that can potentially purchase a unit (which is usally exactly what the board wants).
Median Valuation: Condop's are normally valued in between a Co-op and a Condo. If I were to describe how the same apartment would be valued, under each of these property tyes, it would look something like this:
500K --------> 550K ---------> 600K
Co-op --------> Condop ------> Condominium
Put all these characteristics together and you get a property type that will be very attractive to a first time buyer with limited funds, who needs to finance 90% of their planned purchase. With loans going out to anyone with a credit score over 500, the fact that there is NO BOARD APPROVAL is the next vital ingredient for the potential homebuyer who normally wouldn't have enough liquid assets after closing to appease the co-op board. Add in a valuation lower than a pure Condominium but higher than a pure Co-op, and you can see why Condop's have their own niche market.
Some Condop's To Note:
520 West 23rd Street
310 East 46th Street
333 East 46th Street
240 East 76th Street
300 East 85th Street
Building Data Courtesy of Streeteasy.com.
Posted by Janet
Wed Aug 16th, 2006 12:37 PM
Does a condop appreciate less than a condo and what are the disadvantages of a condop vs condo... which is a better investment?
Posted by Noah
Wed Aug 16th, 2006 01:20 PM
A condop appreciates pretty much the same as a condo, because it offers the same advantages of buying a condo except that you are buying shares of stock instead of real property.
The only reason why a condop would appreciate more than a condo is because the closing costs will be much lower, thus allowing the buyer to put that money to work on the apartment itself rather than the transaction costs.
But, I would think a condop moves with market trends just like any other apartment
Posted by Tan
Thu Feb 15th, 2007 10:56 PM
Thanks for the information! It gives a good general overview of the term "condop".
My only suggestion is that you get someone to proofread your writing. I am no English but some of the errors can be easily picked out.
Posted by Mike
Sun May 31st, 2009 05:00 PM
Hi Noah, thanks for your definition. Ultimately a condop abides by co-op laws and practices correct? Which means the board has the ability to adopt more traditional and stringent co-op rules in the future?
Posted by Clark
Sat Jul 4th, 2009 11:49 PM
Doing research on this term for a course, and I'm glad that you included the words "marketing term" in your introduction, because this is not really the legal definition of condop. But, as always brokers use terms interchangeably when they shouldn't, so what do you do, right?
Posted by KP
Sun Sep 12th, 2010 10:36 AM
I currently have my name on a Condop mortgage. My former Domestic Partner has her name on half the shares document. We are going back and forth, DP has been dissolved and she wants to sell. I want to refinance and rent or move back in. What are my options or am I screwed to just buy her out ?