Cooperative (co-op) housing may consist of low-rise multi-unit buildings, single unit town homes, or apartment complexes. Cooperatives are democratic organizations governed by a board elected by members of the cooperative. Cooperatives may be non-profit or for-profit; however, only for-profit co-op shares can be sold. Members own a share of the co-op rather than the dwelling unit they live in. Members live on the premises, and are involved in decision-making regarding co-op operation, maintenance, policies and the responsibilities of members. Advantages include affordability, governance structure, housing security, social and community benefits, and housing quality.
Cooperative housing is owned and managed by the members of the cooperative. Decisions regarding monthly housing payments are determined by the members based on the costs required to operate the cooperative. Members usually have little incentive to increase monthly costs unless the costs of operating the cooperative increase. The cost to operate cooperative housing is generally lower than operating a rental property; this cost savings can then be passed on to members of the cooperative in the form of a lower down payment to join the cooperative, reduced closing costs, and flexible mortgage terms. Another advantage is that the cooperative is responsible for paying the balance of the mortgage loan -- members are not personally liable for the mortgage of the cooperative.
In partnership with the cooperative directors, members of the co-op are responsible and have control over the operation of the cooperative. Cooperatives are democratic organizations, with each member of the cooperative entitled to a vote regarding any changes to policy or operation of the cooperative. Members elect the board of directors of a cooperative. The board is responsible for determining policy and approving the annual budget of the cooperative.
Members of cooperative housing often rate housing quality high with respect to cleanliness, electricity, heat, hot water, plumbing, windows and security, quality of repairs and characteristics of management. According to Lewis and Higgins (2004), cooperatives also provide low-income families with a safe, high-quality alternative to public housing.
Members of a cooperative can live in a cooperative dwelling indefinitely as long as they are not in violation of any cooperative bylaws and policies and continue to meet their financial obligations to pay the cooperative monthly payment on time.
Members of cooperative housing who own a share in the co-op are considered homeowners and can deduct their share of property taxes and interest on mortgage payments that the cooperative pays. Members also accumulate equity in the co-op over time if the property value increases.
Social and Community Benefits
Members of cooperative housing must participate in the activities and business of the co-op. This may include board committee membership, volunteer committees, approval of board policies and the annual budget, taking care of the premises, and involvement in projects such as a newsletter for the co-op. According to Lewis and Higgins (2004), co-ops may also experience less crime and drug-related activities, and offer opportunities for residents to build capacity, engage in career development and enjoy a higher quality of life. Members can also act as advocates and negotiate as a group for services needed to maintain the cooperative.