A stock cooperative is the earliest form of common interest development and is found predominantly on the East Coast of the United States.
Distinctive Features. Unlike condominium developments where units are individually owned, a stock cooperatives apartments are owned by a corporation. Instead of buying a unit, buyers into a co-op buy shares of stock that give them the right to occupy a particular apartment once they sign an Occupancy Agreement or Proprietary Lease. Because the arrangement is more akin to a landlord-tenant situation, the corporation's board of directors can screen buyers to determine if they are financially stable enough to buy into the development.
For example, after Richard Nixon resigned as President of the United States following Watergate, he was denied ownership at the luxury Dakota Cooperative overlooking New York’s Central Park, where such luminaries as Boris Karloff, Judy Garland, Leonard Bernstein, Joe Namath, John Lennon and Yoko Ono were granted residences. Condominium and planned developments have no such authority.
Davis-Stirling CID: There is an inconsistency in the Davis-Stirling Act that resulted from unfortunate drafting. Civil Code §4200 states that a stock cooperated falls under the Act provided all of the following are recorded: a Declaration and parcel map. Developers rarely, if ever, record a declaration since one is not needed for the formation of a stock cooperative. That would seem to keep stock co-ops from falling under the Act.
Even so, stock cooperatives are specifically identified as one of the four forms of common interest developments subject to the Davis-Stirling Act. (Civ. Code §4100.) An owner's interest in the corporation, whether evidenced by a share of stock, a certificate of membership, or otherwise, is deemed to be an interest in a common interest development. (Civ. Code §4190.)
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