Understanding Co-operatives: The Corporation Factor

As a legal entity, corporations are well known and easily formed. Housing Co-operatives’ sole purpose is to provide homes to its stockholders/members.

In the case of a housing co-operative, the corporation has title to the property in which the individual units are a part. Each stockholder or member has the right to own and occupy his/her unit along with owning a proportionate share of the corporation.

As with all corporations, the Certificate of Incorporation and By-Laws describes how the co-op is organized and governed.

In turn, these documents give each owner the right to annually elect the Board of Directors (who themselves are resident owners). The Board is charged with managing the business affairs of the co-operative and supervising the operation of the physical plant. Day to day management is generally delegated to a property management firm selected by the Board. The Board adopts the annual budget which contains estimates of the association’s operating costs for the coming year. The budget is the basis for establishing the monthly fees charged to each member. The Board also has the authority to establish, amend, and enforce the House Rules which, in conjunction with the Ownership Documents, govern the use and occupancy of the property.

The corporation itself is directly responsible for the monthly payments of principal and interest on any corporate mortgage indebtedness, the payment of real estate taxes on the corporate property and for any other operating costs such as insurance, service contracts, salaries and the like.

Co-operatives are non-profit corporations that are organized either as a stock or as a non-stock/membership corporation.

    From "Co-operative Speaking" by the Edmund J. Flynn Company, Washington, DC

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