Which statement about cooperatives is incorrect?

• A. The owner has two legal relationships—ownership in the cooperative and a lease for the living unit.
• B. The association owns all of the real estate as a not-for profit corporation for most cooperatives.
• C. There are a few cooperatives set up as for-profit entities.
• D. Cooperatives are always owned by developers and never by residents.

Answer: (D)

The fundamental idea here is how ownership works in a housing cooperative. In a co-op, residents don’t own a specific unit outright. Instead, they own shares in the cooperative corporation and hold a proprietary lease that gives them the right to occupy a particular unit. The cooperative, as the legal owner, holds title to the real estate. This structure is typically organized as a not-for-profit corporation, which is why the statement that the association owns all real estate as a not-for-profit is a common and accurate description. Some cooperatives are set up as for-profit entities, but that’s the exception rather than the rule. While a developer may sponsor or control a co-op initially, ownership or control often transfers to residents over time.

Therefore, the statement that cooperatives are always owned by developers and never by residents is not correct.