A co-operative is any type of organization that is in the possession and control of its user members for a common purpose and that follows the principles of cooperation. A co-op works for the good of its members on a not-for-profit basis to provide the goods and services members need at the lowest practical cost. Members/shareholders own the co-op and participate in the management of the co-op in the same way. Sub-Chapter T refers to sections 1381 to 1388 of the Internal Income Code of Member States, which cover cooperatives that have some public benefit. The co-operative housing corporation pays federal corporation tax in accordance with the provisions of the sub-chapter T. Co-ops that have mortgage insurance by HUD or the FHA have certain obligations that are described in a document as a regulatory agreement. Co-operatives funded by national and local housing authorities often have similar contracts, often inspired by the standard HUD agreement. In principle, the regulatory agreement requires the co-op to comply with the HUD (or FHA) rules that insured the mortgage in order to induce a lender to finance the development. This document binds the Mortgagor (the co-operative) and the mortgage borrower (the financial institution that holds the mortgage until the amount borrowed is paid plus interest) with the secretary of HUD. Section 213 is a HUD program that provides mortgages only for co-op housing projects at interest rates on the market.
Section 213 has been used to inseurance more than 500 co-operative housing projects for a total of more than 70,000 units. Section 202 is a HUD program that provides housing funding for seniors and people with disabilities. This program has led to the development of a number of housing co-operatives for the elderly. The annual meeting of members is an annual meeting to which all members of the co-op are invited. At the annual meeting, members elect the co-op`s board of directors, changes to the statutes may be voted on and other important issues may be brought before the entire membership. The financial status and general condition of the co-op are generally reported. Most cooperatives, as capital companies, are legally bound by their statutes to hold an annual meeting of members and shareholders. The statutes indicate when, where and on the agenda. A limited equity co-operative is a co-operative in which the statutes limit the resale price of a membership/stock in order to maintain housing at an affordable price for new members. The resale value of the shares is not determined by what the market will bear, as in market cooperatives, but it follows a pre-established formula in the statutes that limits this maximum resale value over time. Limited equity co-operatives generally limit the acquisition of affiliations to individuals below a certain level of annual income. It also serves to preserve property for low- and middle-income families.