A condop in real estate is a term for a residential establishment (building or portion of a building) that includes both a condominium and cooperative ownership structure. Typically the condop refers to the residential portion of a building which is treated as a single condominium unit owned through a cooperative ownership structure.
The term may also refer to a cooperative that behaves like a condominium.
The term is a contraction of the words condominium and co-op.
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Condops first came into use in the 1960s and were employed by developers that wanted to divest their residential units at a time when condominiums were not yet in popular in major cities, particularly New York. The condop (as strictly defined) is still a relatively rare item in the US. For example as of 2007, New York City had fewer than 300 condop buildings as compared to more than 6,700 cooperatives and 2,300 condominiums, representing just over 3% of residential buildings.[1]
The condop is a hybrid ownership structure. Typically a condominium differs from a cooperative in that residents of a condominium directly own their apartments whereas residents in a cooperative own shares in a corporation that owns the building and a right to use a specific apartment in the building. Condops blur the distinction between the two concepts as the cooperative corporation does not own a whole building but just the residential condominium space within it.
Typically, in a condop, the structure was used to separate the residential component from the commercial components. Often, this can be advantageous for the developer or sponsor to retain ownership of the non-residential space in a building.
The cooperative portion of the condop is effectively no different than any cooperative building that contains only residential units. However, in real estate vernacular, the term condop is often also used to refer to a cooperative that behaves like a condominium or a "co-op with condo rules". In these situations, unlike a traditional conventional cooperative, the bylaws in a condop will more closely resemble the rules of a condominium rather than a cooperative. Typically condops will set out a lower required down payment for prospective purchasers and do not include many of the restrictive measures that impact prospective purchasers of cooperative apartments. The bylaws for condops typically do not include the need for board approval to sell or sublet an apartment. Additionally, restrictions on alterations to the apartment are more consistent with condos than cooperatives.