As housing costs continue to climb and the housing market tightens, housing cooperatives have become an increasingly attractive housing option. With the establishment of a secondary market for cooperative loans, conventional financing is more readily available. Personal tax deductions, lower default and turnover rates, lower tax assessments, reduced maintenance costs and resident participation and control are further incentives for choosing the cooperative route to homeownership.

Cooperative housing is not a new concept. This country's first housing cooperative was organized New York City in the late 1800s. Today, more than 1 million units of cooperative housing are scattered throughout the United States, with large numbers located in major urban areas like New York

Housing cooperatives are a form of multifamily homeownership. In a housing cooperative, there are two owners, the cooperative corporation and the corporation's owners, who are typically known as tenant-stockholders.

The cooperative corporation owns or leases the housing project, including all land, dwelling units and common areas. The cooperative corporation, in turn, is jointly owned by its tenant-stockholders, who by virtue of their stock ownership, are entitled to occupy a specific dwelling unit.

Tenant-stockholders purchase stock — sometimes called shares or membership certificates — in the cooperative corporation. Upon purchasing stock in the cooperative, the tenant-stockholder signs a perpetual lease, called a proprietary lease or occupancy agreement that gives the tenant-stockholder a legal and exclusive right to occupy a dwelling unit as long as all obligations to the cooperative are met.

The cooperative corporation is the legal owner of the property. As such, the corporation is responsible for meeting its financial obligations, including mortgage payments, real property taxes and management and maintenance costs. The cooperative passes on these costs to the tenant-stockholders, who pay a single monthly fee or carrying charge to the cooperative.

By altering the basic legal and finance structures, many different types of housing cooperatives can be developed.