From the American Homeowners Assn.

Condominium... cooperative... they sound the same.

The first-time home buyer has enough to worry about, right? Why worry about what makes a condo different from a co-op? Because the legal definitions are very different as they apply to ownership and management of your property.

“The condo/co-op distinction is very important for first-time home buyers who want to step up from renting to owning,” says Richard Roll, president of American Homeowners Association. “Make sure you know what you're getting into before you buy.”

In a cooperative, residents don't actually own their apartments. The co-op member instead holds a lease or contract enabling him or her to occupy the unit. Each also has an interest in the entire building. In a condominium, the condo owner owns the entire apartment along with a percentage of the “common areas.”

The key difference between buying a condo or co-op is that most cooperatives require the purchaser to be approved by a membership committee. Don't worry, it's probably not the Spanish Inquisition. The only two reasons you can be turned down are: a) if you lack the financial wherewithal to live there, or b) if you refuse or show an unwillingness to abide by the cooperative association's rules and regulations. No applicant can be rejected because of age, sex, race, sexual preference or religion.

Cooperative associations manage the property collectively as do condominium associations. Each unit owner holds voting rights or a share in the association. But condo associations do not typically approve new purchasers who want to buy into the building. Condo owners also own their individual units and leave the building's “common areas” in the control of the association.

Decisions are made by vote of the association members or the association's board of directors, depending on the bylaws, on matters including financial management, rules of occupancy, building maintenance, and so on.

Apart from that, there are a few differences from a tax perspective. Cooperative residents get to deduct their proportionate share of the interest on the loan for the entire cooperative. Plus they can deduct interest they pay on their own loan. And they can deduct their proportionate share of real estate taxes, under most scenarios.

For information, go to http://www.ahahome.com, the web site for American Homeowners Association.