Limited Equity Cooperatives
Cooperatives, or “co-ops”, are a form of housing unit ownership that differs from the more common condominium form of ownership. Like condominium ownership, cooperative ownership is a structure through which several owners jointly own a building comprised of multiple units. In a condominium, each owner holds a deed to their individual unit, as well as an interest in the building’s common areas. In a cooperative, a corporation owns the entire building. The corporation is made up of “shareholders”. Each shareholder owns shares of stock in the corporation which come with the right to live in their unit. When a buyer purchases into a co-op, they are buying shares in and becoming part of the ownership corporation.
There are several unrestricted market-rate co-ops throughout the City. These buildings are managed privately and available units are usually listed with a real estate broker. There are also several limited-equity co-ops in Cambridge, created with assistance from the City prior to the end of rent control. These limited equity co-ops have income limits for new shareholders and restrictions on the increase in value of each share of stock. Each co-op is managed by its residents according to its own set of bylaws, which govern the how the co-op is run.
When a limited equity co-op has a vacancy, the co-op itself offers the unit to new applicants and reviews applications from prospective members. The City often assists co-ops in reaching out to residents who may be interested in applying. However, each co-op is responsible for choosing the applicant to whom they offer the unit and available co-op share(s). The application process often includes several interviews with co-op members.
Co-ops are financed differently than condominiums. There is usually a “buy-in” price that covers the value of the share(s). Banks generally do not provide mortgages for these share purchases, but certain co-ops offer “share loans” to cover a portion of the share purchase. Applicants looking to purchase co-op shares need to have funds to cover all or a portion of the share purchase price.
Shareholders also pay a monthly “carrying charge” that covers certain co-op expenses, including maintenance, insurance, taxes, and payments on loans held by the co-op as a whole. The carrying charges for limited equity co-ops are based on the co-op's costs, not the individual shareholder’s income. For most limited equity co-ops, Section 8 vouchers can be used to pay the carrying charge in the same way as rent.
If you are interested in being notified when the City is assisting a limited equity co-op in selecting new residents for a co-op unit for which you might be eligible, please contact the Housing Division at 617/349-4622 or housing@cambridgema.gov.
For More Information
If you are interested in learning more about limited equity co-ops, please contact Anna Dolmatch at 617/349-4645 or via email at adolmatch@cambridgema.gov.