Posted by Kansas Property Solutions on 2023-12-22
A housing cooperative represents a legal entity, often structured as a cooperative or a corporation, which owns real estate comprising one or more residential buildings. This housing tenure stands apart due to its cooperative nature, where ownership is shared among members who purchase shares in the cooperative, granting them the right to occupy a housing unit.
The cooperative model is based on the principle of pooled resources, enhancing the buying power of members and subsequently reducing their individual costs related to home ownership. This can include services and products essential for residential maintenance and management.
A key feature of some housing cooperatives is the member-driven selection process for new residents, which is not commonly seen in other housing models. This approach fosters a sense of community and ensures compatibility within the cooperative.
Housing cooperatives are categorized mainly into two types: non-ownership or non-equity cooperatives, where occupancy rights are akin to a lease agreement, and ownership or equity cooperatives, where these rights are tied to purchase agreements and legal instruments.
In contrast to condominiums, where individuals own separate units, cooperative ownership is collective. Shareholders do not own the real estate directly but own a share in the entity that possesses the real estate. This collective ownership model brings unique operational and governance aspects, usually regulated by specific legislation akin to corporate laws.
In terms of management, larger cooperatives typically have an elected board of directors responsible for making key business decisions, while smaller ones might involve all members in the decision-making process. This board structure ensures that members have a voice in the cooperative's governance, with policies and rules established for the benefit and peaceful coexistence of all members.
Financially, housing cooperatives usually operate on a non-profit basis, with income primarily derived from member rents or fees. Any surplus is typically used for operational needs, such as asset replacement or maintenance, rather than for profit generation. Cooperatives can raise funds for significant repairs or upgrades through various methods, including assessments, reserve drawdowns, and loans.
The cooperative housing model includes market-rate and limited-equity co-ops. Market-rate co-ops allow share prices to fluctuate based on the market, similar to condominiums, whereas limited-equity co-ops maintain affordable housing by regulating share resale prices. This model ensures that housing remains accessible and affordable, aligning with the cooperative's underlying principles of community and shared responsibility.
A housing cooperative, or housing co-op, is a legal entity, usually a cooperative or a corporation, which owns real estate, consisting of one or more residential buildings; it is one type of housing tenure. Typically housing cooperatives are owned by shareholders but in some cases they can be owned by a non-profit organization. They are a distinctive form of home ownership that have many characteristics that differ from other residential arrangements such as single family home ownership, condominiums and renting.[1]
The cooperative is membership based, with membership granted by way of a share purchase in the cooperative. Each shareholder in the legal entity is granted the right to occupy one housing unit. A primary advantage of the housing cooperative is the pooling of the members' resources so that their buying power is leveraged; thus lowering the cost per member in all the services and products associated with home ownership.
Another key element in some forms of housing cooperatives is that the members, through their elected representatives, screen and select who may live in the cooperative, unlike any other form of home ownership.