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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 ?
Its first home was within a shop in Abbey Street,Nuneaton, with the rent paid for by the Heart of England Co-operative Society.
"We are pleased to work with the Union Co-operative Society and contribute to the social and economic upliftment of the deserving individuals and families in need in the Emirate.
On their part, Union Co-operative Society will provide Tanmia with detailed requirements specific to job openings, including job title, educational level and gender, for direct placement.
UK society Anglia Regional Co-operative Society (ARCS) has selected Spectrum 3 EDI (Electronic Data Interchange) software from Freeway Commerce Ltd, a specialist in EDI and e-commerce integration, to electronically receive invoices and delivery advice notes.
A spokesman said this could provide a jobs lifeline for some staff at a historic Birmingham dairy, which is earmarked to close as part of the planned Midlands Co-operative Society deal.
The change would create a more tax-neutral regime for the transfer of the registered office of a European company or of a European Co-operative Society between Member States.
By CAROLINE WAMBUI It is seven in the morning and Julius Maingi is walking majestically to Kithirune Dairy Co-operative Society, a milk can in one hand.
Motswedi Savings and Credit Co-operative Society (SACCOS) general manager has urged government employees to join the co-operative.
To celebrate raising PS1 million for charities and worthy causes in the region, the Heart of England Co-operative Society wants Coventry Telegraph readers to nominate an organisation to win a oneoff donation.
Summary: Ahmedabad (Gujarat) [Indi], Mar 19 (NewsVoir): Adarsh Credit Co-operative Society Limited, India largest credit co-operative society is the only organization from India which will be presenting its success story on the global stage of 'Challenge Yourself to Think' summit, which is being held in Las Vegas, USA.
Houston, TX, December 22, 2017 --( Streebo Inc., The leading digital transformation company, today announced, it has helped Adarsh Credit Co-operative Society Ltd.

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