Owning a co-operative apartment is different than owning a condominium or a single family home. When you are thinking of purchasing one, here are some things to know. Each co-op building is owned jointly by all of the people who reside there. One does not "own" the particular unit itself (the walls and within), but rather one owns shares in the corporation that owns the building. When one closes on a co-op, a buyer gets a pro-rata ownership via stock certificates (shares) in the corporation and a proprietary lease which confers on the owner the right to reside in the particular unit that they have purchased.
The corporation is managed by a board of directors who set the policies regarding the building (or buildings). The board makes decisions regarding capital improvements to the building, and rules such as whether pets are permitted, for example. Additionally, the coop board establishes financial criteria for all buyers, such as whether a buyer is allowed to have a mortgage. A few buildings are "cash only", but the majority do permit a buyer to obtain financing.
Coop boards are charged with maintaining the financial health of the corporation and thus ensuring that potential purchasers are financially prepared to support the other owners should the need arise. Expenses of the building are shared among owners based on the percentage of shares that they own in the corporation. When purchasing a coop, one should review recent prior financial statements of the building to make learn about the financial condition of the corporation, as one would with any stock purchase.
After making an offer on a co-op and having it accepted by the owner, a buyer will be asked to complete an application packet which will ask for detailed financial information as well as personal references. Although a seller may agree to accept your offer, the coop board will be the ultimate decision maker of whether you will be an acceptable fit in the corporation. Coop boards must abide by federal, state and local laws regarding fair housing, but will want to know about your personal situation as well. There is frequently an interview with the coop board. It should be taken seriously, and a potential purchaser should put their best foot forward.