Cooperative

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Cooperative

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.

cooperative

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.

References in periodicals archive ?
"The parties are working cooperatively with the CMA and will continue to do so."
These subscribers will cooperatively own the solar array, participate in the project's governance, and potentially earn dividends in the long-term.
"Barrick Gold worked cooperatively with EPA, BLM and the state of Nevada to ensure a timely and comprehensive solution."
A Cambridge University study found that females in some cooperatively breeding species reduce the size of their eggs when other members of their group are available to help protect, incubate and feed offspring after laying.
Pakistan also called on the international community to ensure that States remain willing to resolve water issues cooperatively and ensure that bilateral and multilateral arrangements are not undermined through unilateral or coercive measures.
But we work very cooperatively with our friends and allies here to make sure that Philippine sensibilities were also taken into account, custody has been carried out at a sovereign Philippine base (Camp) Aguinaldo and so I anticipate that whatever road ahead there is and I'm not going to prejudge the verdict in the case and so forth because that is in the hands of the court," he said.
TEHRAN (FNA)- A new study examined aggressive behavior between subjects playing games cooperatively, competitively and by themselves.
Kamrup, Assam under Cooperatively Least Developed States category; Mulukanoor Women's Cooperative Dairy Vishwandapuri, Distt.
I want to add that a favorite community resource for living wisely, well, and lightly on the Earth is my local cooperatively owned grocery store.
Six projects have been awarded funding to develop robots that can interact and work cooperatively with people and respond to changing environments in a variety of healthcare applications, the National Institutes of Health, collaborating with three other federal agencies, announced last week.
A few religious orders have similar houses of discernment for their own organizations, but Aymond said that no other diocese has one cooperatively managed by all the local orders of religious women.

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