How does a cooperative differ from a condominium?

In the context of real estate, a cooperative and a condominium represent two distinct forms of ownership. In a cooperative, residents own shares in a corporation that owns the entire property. In this arrangement, ownership of shares translates to the right to occupy a specific unit, but there is no direct ownership of the real estate itself. This means that the residents collectively make decisions about the property through the board of directors, and they share responsibilities, including maintenance and financial obligations.

Conversely, in a condominium, individuals own their specific units outright as real property, along with a percentage of the common areas. This means that each owner has a deed to their unit and can sell, mortgage, or lease it independently, subject to any community rules or regulations.

The distinction outlined in the correct answer clarifies this crucial difference in ownership structure, which affects everything from financing to governance and management of the property. This understanding is fundamental for anyone studying real estate, especially in the contexts of ownership rights and investment strategies.