The Difference Between Condos and Co-ops in Florida

As a premier vacation and retirement destination, Florida has plenty of condominiums in nearly every community. While standard fare in places like New York, cooperatives (“co-ops”) in Florida are relatively rare.

Here is what you need to know about condos vs. co-ops:

Florida Condominiums

Condos in Florida are governed by the Florida Condominium Act, which regulates how they are treated as real property. When you buy a condo in Florida, you own your individual unit but also have what is known as an “undivided interest” in all the common areas, such as the pool, parking garage, tennis courts, etc. You are required to abide by the rules and regulations as established by the condominium complex as one part of a community of condo owners.

As a condo owner, you are responsible for paying property taxes on your unit, which provides you with a tax deduction. Most condo complexes also assess monthly dues that go to pay for the overall maintenance of the complex, which is not deductible.

Unless you pay the full purchase price upfront, you will be responsible for obtaining a mortgage. When you sell your condo, you transfer ownership in the same way you would if you sold a house — by real estate deed.

Florida Cooperatives

The major difference between condos and co-ops is in property ownership. You do not “buy” a co-op; instead, you become a shareholder in the corporation that owns the co-op. The loan you take out to invest in a co-op is considered a home loan, not a mortgage loan.

Generally, you will have to be approved by a co-op board as a shareholder and must abide by the rules of the co-op board for as long as you are a shareholder. If you wish to sell your interest in the co-op, the buyer will typically have to go through this approval process as well.

Since you do not own your co-op, you are not building equity in the property. You will be paying monthly HOA dues for maintenance; these dues also cover the property taxes associated with the unit since it is technically owned by the corporation. Depending on the co-op rules, you may be prohibited from making any changes to the inside of the unit beyond regular maintenance.

Whether you are making an investment in a condo or a co-op, it is always wise to seek legal counsel to review the covenants, conditions and restrictions (“CC&Rs) that come with condo or co-op ownership. Both types of property may also carry restrictions against pets or renting out the property — typically, co-ops do not allow rentals, so are probably not the best choice for a vacation property investment.