What's a Co-op? And Three For Sale!

What is a co-op? If you live outside of New York City, you might not know! I told my mom I saw a great unit, in a co-op. Her immediate response “That’s bad, co-ops are so bad.”

So here I am, explaining what a co-op is, how it works, its pros and its cons. But just to be clear, co-ops aren’t bad.

In Boston, there are a handful. 62 Beacon, 81 Beacon, 274 Beacon, 282 Beacon, 360/370/380/388 Beacon, 301 Berkeley and 16 Harcourt. There could very well be more, but these are all that I’ve come across. They’re difficult to identify through public records, because they’re recorded as apartment buildings. Right now, there are three units in co-op buildings for sale. All are on Beacon Street, 81, 274 and 380. All are absolutely gorgeous units. More on those later.

Which brings me to my first point. When you buy a unit in a co-op, you’re not buying real property. You’re not buying the space defined by the walls, you don’t get a deed. When you buy into a co-op, you buy shares of a corporation. The corporation is the owner of the building in its entirety. When you live in a co-op, you’re more like a tenant than a condo owner. You just happen to own a share of the corporation that owns the building where you reside. And your share is determined by the size of the space you’ll be occupying.

The owners of the co-op elect a board to run the day-to-day operations of the building, similar to a condominium association. However, part of the board’s responsibility is to screen prospective owners. Co-op boards can set a variety of requirements. The board can mandate that new owners pay all cash. They can require that new owners meet a certain income or net-worth requirement. They can also do more typical regulating, like no rentals or no pets. Co-op boards can deny any potential owner, without giving any reason at all. Most of the time, the reason is that financial requirements aren’t met, or because they believe the owner won’t be able to meet the demands of participating in the corporation.

You may think that because you’re not buying property, but shares of a business, that Fair Housing Laws don’t apply, but that’s not true. While boards can deny without giving a reason, if a prospective owner feels they’ve been discriminated against, they can file a complaint with HUD.

The upside of stricter regulations, is generally better financial stability. It’s far less likely that an owner will surprise everyone with insolvency and need to sell quickly, or that an owner will trash their unit or common areas. They also generally have higher rates of owner occupancy.

When you see a co-op for sale, you may notice that the monthly fees are usually higher than you would expect. That’s because they includes the taxes! The co-op owners pay their share of the taxes monthly to the corporation. As an owner, a portion of your taxes are still deductible. So while it seems that living in a co-op is more expensive, it usually isn’t. The corporation doesn’t operate with the goal of generating a profit.

As we’ve seen, a co-op has its pluses and minuses. The upside is that it’s a more stable building, the downside is that it can be much harder to buy into one.

Mom, I hope I’ve changed your opinion on co-ops.

Of the three currently on the market, I’ve been in all three. But I only have photos of the listing at 380 Beacon. 81 Beacon was divine, and totally my style, but I didn’t get any photos. I don’t want to talk about it. It’s an 11th floor penthouse unit with windows on three sides. Exquisitely done and well maintained. It has three bedrooms and four bathrooms. Asking price is $8,450,000 and monthly dues are $6,196/mo. In this building, it includes heat, water, extra storage as well as a live-in super and a concierge. Don’t forget, co-op monthly dues also include taxes!

Over the years, I’ve seen three units in 274 Beacon, all very nice. The one on the market now I managed to lose the photos of. It’s a simple two bedroom, two bathroom place on the second floor with expansive Charles River views. Asking price is $2,095,000 with monthly dues of $4,519.

So here’s the deal with 380 Beacon, where all of the interior photos are from in this article. There are four structures in the cooperative with three units in each. You enter through a courtyard that separates the buildings. More separation means more windows! This is a 3,700 square foot, three bedroom, three and a half bathroom unit with some really great views.

If you have any questions about this post or about any of the properties mentioned, I’d love to hear from you! I can be reached by phone or email at 617 528 8461 and willy.charleton@nemoves.com .