Buying an apartment in New York City is different from purchasing property anywhere else in the U.S. Acting as your buyer’s broker, it is our job to help you through this unfamiliar terrain at no charge to you.
What is a condo?
A condominium apartment is “real property.” Buyers of condominiums receive deeds, as they would with the purchase of a house or parcel of land. Because a condominium is considered “real property,” separate taxes are imposed on each apartment (unlike a co-op where taxes are imposed on the building and each shareholder is allocated a portion, based on their number of shares, which is included in the monthly maintenance fee). Owners also pay a monthly common charge that covers the daily maintenance of the building, but unlike a co-op, it is not tax deductible. Owners may also be subject to “special assessment” fees that are temporary additions to the monthly common charges to cover unanticipated building repairs or improvement costs. The monthly real estate taxes and monthly fees for condos are generally lower than co-ops, and resale prices are generally higher.
Financing for condo apartments is more flexible—a 10% down payment is typically sufficient. Additionally, subletting is not subject to tight restrictions, so it is common to find many investor-owned apartments.
What is a co-op?
Cooperatives are owned by an apartment corporation. Buyers purchase shares within the cooperative corporation that entitle them to long-term proprietary leases. Buyers are not technically “owners” — they are “shareholders” who own a percentage of the total shares of the corporation. Shares are distributed among apartments in proportion to square footage and unique unit features (terrace, skylights, views, etc.).
Co-op shareholders pay a monthly maintenance fee that covers the general expenses of the building. (General expenses consist of building insurance, real estate taxes, the cost of materials and services used for maintenance, the salary of lobby attendants and building staff, etc.) Portions of the monthly maintenance fee are tax deductible. Shareholders are also subject to “special assessment” fees in addition to the monthly maintenance fee, which cover unanticipated building repairs and improvement costs.
All prospective purchasers are interviewed by the building’s board of directors before being permitted to close on the purchase of a co-op. A down payment of 20%-25% or more of the total apartment price is typically required. Subletting may be permissible, but is subject to limitations and board approval. This aspect makes co-ops mostly unattractive for investors.