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An association or corporation established for the purpose of providing services on a nonprofit basis to its shareholders or members who own and control it.

The nature and functions of cooperatives differ considerably—such as purchasing cooperatives, consumer cooperatives, and marketing cooperatives.

In the context of agriculture, a farmers' cooperative refers to an organization of farmers residing in the same locale that is established for their mutual benefit in regard to the cultivation and harvest of their products, the purchase of farm equipment and supplies at the lowest possible cost, and the sale of their products at the maximum possible price.

The term cooperative also signifies the ownership of an apartment building by a nonprofit corporation that holds title to it and the property upon which it is situated. Stock in the corporation is allotted among the apartment units on the basis of their relative value or size. The right of occupancy to a particular apartment is granted to each cooperative member, who purchases the shares assigned to the desired unit. The member subsequently receives a long-term proprietary lease to that unit. The rent payable pursuant to the lease is that member's proportionate share of the expenses the corporation incurs in operating the cooperative—such as insurance, taxes, maintenance, management, and debt service. The cooperative concept evolved in New York City during the early 1900s as a mode of accommodating the public's desire for home ownership; it subsequently expanded to other large urban centers.

In order to finance the purchase or construction of the cooperative building, the cooperative places a blanket mortgage on the property, which is pledged to support the given debt. Lenders usually are hesitant to accept an individual member's stock and proprietary lease as security for a long-term loan. The members' lien (a claim on property to satisfy a debt) on the lease would be subordinate to the blanket mortgage on the property. The purchaser of a cooperative apartment usually must have sufficient cash available to pay for the stock allotted to the unit he or she wishes to obtain. The initial price of the stock generally does not exceed the amount required for a down payment on a single-family residence. As cooperative members accumulate Equity (the value of property exceeding the total debts on it) in their stock, subsequent purchasers must either have a substantial amount of cash available or locate a seller who is willing to recoup the equity in installments over several years.

Cooperative members are also financially dependent on each other. The existence of a single blanket mortgage paid by rent receipts means that if several members default in their rent payments, the corporation might not have sufficient funds to pay a mortgage loan installment. Foreclosure will ensue in regard to the entire membership unless it acts to satisfy the default. Although special reserves and assessments are generally employed to cover such a contingency, the available funds might be inadequate to prevent default.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.


n. an association of individual businesses, farmers, ranchers, or manufacturers with similar interests, intending to cooperate in marketing, shipping and related activities (sometimes under a single brand name) to sell their products efficiently, and then share the profits based on the production, capital or effort of each. "Sunkist" oranges is an example of a large cooperative. Cooperatives include dairy milk producers, cotton gins, and thousands of other enterprises of all sizes. There are also cooperatives in which consumers form retail outlets like grocery stores and share the profits based on the amount of patronage of each member, but they have found it difficult to compete with the giant supermarket chains.

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
References in periodicals archive ?
The point of the fourth hyphotesis is that, at the national level, the co-operative system does not function the way it would satisfy co-operative members' needs.
Now, in this superb contest in association with The Co-operative Wills and Funeral Planning, TEN lucky readers will win pounds 1,000 in cash each - enough to make any dream experience a reality.
They were concerned that autonomous producer co-operatives would not share their profits with consumers and would, through a Co-operative Union, dominate the consumer.
HOW TO ENTER All you have to do to be in with a chance of winning is answer the following question: When did Rangers and Celtic last meet in the Co-operative Insurance Cup Final?
Because they develop the policies that determine the co-operative's daily and long term operation, trust, communication, and co-operation are vital to the co-op's success.
"The Co-operative will also continue to provide a service at its stores in the Linthorpe and Brookfield areas of Middlesbrough." Hemlington councillor Nicky Walker said: "Residents are angry about it.
However, the new regulations are being discussed in a global framework: the Basel Committee has only a few European members and the problem is to create awareness among non-European banking regulators, who are not necessarily familiar with co-operative banks.
Mr Makgalemele also informed the society's members that they needed to understand that the environment in which their co-operative operated had high local and international standards to which the society had to conform.
The co-operative movement, from 1960 onwards, took a downturn and ended up as instrument of manipulation of the less well-off segments of the Cyprus population in the hands of the political parties.
"The term of office of the members (of the committee) shall be as spelt out in the bylaws provided that a term shall not exceed three years and that a person (official) shall not serve for more than two consecutive terms," reads the section.Section 57 (5), of the Act directs all co-operative societies that have been in existence before the enactment of the Act, to "hold a special general meeting for the purpose of compliance with this section".
With Brexit dominating last week's Royal Welsh Show, Derek Walker, chief executive of the Wales Cooperative Centre, believes it's time for more co-operative action within the Welsh agri-food sector.
The major investment has resulted in former Wooldale Co-operative stores being revamped in Wooldale Road, Holmfirth; Holmfirth Road, New Mill, and Springwood Road, Thongsbridge.