Condos and co-ops on the New York real estate exam

Why New York tests this harder than most states

Much of New York City's housing is in cooperatives and condominiums, so both feature on the salesperson exam. The questions nearly always come back to one difference in what the buyer actually owns.

A condominium

A condo buyer owns the unit as real property, with a deed, plus an undivided share of the common elements such as the lobby, the roof and the land. The owner pays common charges for upkeep and pays property tax on the unit.

A cooperative

A co-op buyer owns no real property. A corporation owns the building, and the buyer buys shares in it, which come with a proprietary lease for a particular apartment. The building's mortgage and taxes are shared through a monthly maintenance charge.

What follows from the difference

• Approval. Co-op boards usually approve or reject buyers. Condo boards generally have less control, often a right of first refusal.
• Financing. A co-op purchase is financed with a share loan, secured by the shares and the lease, not a mortgage on real property.
• Closing documents. A condo buyer receives a deed. A co-op buyer receives a stock certificate and a proprietary lease.
• Monthly costs. Condo common charges, with taxes paid separately, against co-op maintenance, which includes a share of the building's taxes and mortgage.

How to answer the questions

Ask first what the buyer owns: real property, or shares. Almost every other answer follows from that. A question that mentions a deed is about a condo; one that mentions shares or a proprietary lease is about a co-op.