Those of us who have experienced the New York City real estate market know that in many ways, it’s unlike any other in the world. Whether you’re a longtime resident or you’re just starting to look for a home in your new city, allow us to clear up one of the most confusing terms out there: The Co-op.
Apartments for sale in NYC are either condos or co-ops. Condos are a pretty standard type of property you’ll come across in most every city, whereas co-ops are pretty unique. In other cities, condos are typically the standard format for purchasing apartments, but about 75 percent of apartments for sale in New York are co-ops.
Our New York City property management team has expertise in managing both co-op and condo buildings. We’ll break down everything you need to know about each building type and what may be right for you.
What is a Condominium?
In New York City, condos did not begin to gain popularity until the 1970s. This means that condos are typically in newer buildings. If you’ve lived outside of New York City it’s likely that you’re aware of how a condominium works. Purchasing a condominium is similar to purchasing a home. When you buy a condo unit, your apartment fully belongs to you. While your condo may be in a larger building or community made up of multiple units, you own the space within your unit and have rights to use any common areas. As with purchasing a home, you are also responsible for the taxes on your property. If you decide you want to sell, simply list your unit and proceed.
Condo buildings are known as associations. Typically associations come with monthly fees that are paid for by members for day-to-day operations and general upkeep of common spaces. Associations have boards to make decisions about the common areas and vendors, but in a condo community there are typically fewer restrictions, however, rules can vary per association.
If you want to sublet your space, you are usually free to do so without approval from the association board. If you want to sell, the building will typically have the right of first refusal, which means if they don’t want to approve a new buyer from purchasing your condo unit the building must buy it themselves.
What is a Co-op Building?
Older properties in more historic areas of New York City are typically co-op buildings. In a co-op structure, you do not outright own your apartment such as with a condo. Instead, you purchase a number of shares in the corporation that is your building. The size of your share is determined by the size of the apartment you’re interested in purchasing. Buying these shares allows you to live in the home, but you do not outright own that specific space. Instead of a deed, when you buy a co-op you’re given a proprietary lease and are considered a shareholder. If you decide you want to sell your shares, the process is more challenging because your purchaser must be approved by the co-op board.
When you want to purchase a co-op, you must go through a lengthy application process that includes a stringent financial review and an interview with the co-op board. The board gets the final say on whether you are approved to purchase the unit and live in the co-op building and they can reject offers without providing reasoning. Co-op boards also create rules for the building, which can range from quiet hours, to what decorations you can put on your door, to pet policies. Such as with a condo, you are allowed to paint and renovate but depending on the level of the renovations you may need to have these changes approved by the board. The goal of a co-op is to promote harmonious living.
One of the main restrictions put on co-op shareholders is with subletting. Generally speaking, you are not allowed to sublet a unit and even if it is allowed it is on a limited basis of typically two years. Subletters have to apply and be approved by the board similarly to when you purchase the co-op. Policies can vary but some buildings require the shareholder to have lived in the co-op building for at least a few years before they can sublet and some co-ops place caps on how many units can be sublet at once in the building.
Monthly fees for co-op buildings tend to be high and they cover building maintenance and management, as well as the property taxes that the corporation is responsible for paying. To offset these monthly fees, the price of the unit is typically lower than purchasing a condo.
Which is Right for You?
Deciding between a condominium and a co-op can be a tough choice. Co-ops are recommended for those who value stability and are looking to live somewhere long term. In a co-op building, it’s likely that you’ll have the same neighbors for many years to come. If you value flexibility or are looking to make a real estate investment by renting out your unit, then a condo would be right for your needs.
Senné offers property management services in New York City for both condominium associations and co-op buildings. We understand the intricacies of working with associations and co-op boards and what goes into the day-to-day physical and financial management of these types of properties. If you are looking for management for your condo or co-op in New York, reach out at [email protected].
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