In New York City, nearly every apartment is a co-op which are subject to many more rules than traditional apartment buildings. Due to these additional rules, it’s no wonder buyers in the market for a co-op have more questions than the average purchaser. Though everyone is different, some questions consistently arise when purchasing a co-op in New York City.
- How is a Co-Op Different from a Condominium in New York City?
Co-ops and condominiums differ in the structure of their ownership. Corporations own co-op apartments and so are not technically real property. The purchase of a co-op is really a purchase of shares in the corporation that are allocated to the particular apartment in the building, allowing you an entitlement to a proprietary lease of the unit. With a condominium, you purchase real property when purchasing the unit and will receive an actual deed and separate tax bill.
- Do Co-Ops Have a Required Down Payment Amount?
There is no fixed rule as to how much co-ops can require as a down payment, so each co-op is different. Many in New York City allow 20-25% down, but very prestigious, exclusive co-ops often require 40% or more.
- How Much Should I Expect to Pay in Closing Costs?
Closing costs for co-ops are much cheaper than for condominiums in New York City, because co-op purchasers aren’t required to purchase title insurance or pay a mortgage recording tax. Normally, a co-op buyer should anticipate paying between 1-2% of the purchase price in closing costs. The cost rises to 2-3% of the price for apartments bought for $1 million or more.
- Can I Co-Purchase or Gift a Co-Op?
Due to the high price of real estate in New York City, it’s not uncommon for first time buyers to get financial help from family or friends to make the purchase possible. You should verify with any co-op building you might want to live in if they allow for either co-purchasing or gifting a co-op apartment. If it’s allowed, you will probably need a gift letter to document the fact the apartment is in fact a gift. You should mention this to your broker and real estate attorney early in the purchase process so that you can get the appropriate documents in order if you do end up purchasing the co-op in this manner.
New York Real Estate Attorney
Buying property in New York City is complicated enough, and the additional regulations around co-ops makes the process even harder to navigate. It’s important for prospective buyers to ask the right questions in order to avoid unpleasant surprises further into the purchase process. Having the help of the experienced New York real estate attorneys at MOWK Law can make buying a co-op a seamless transaction and ensure you get what you want and exactly what you pay for. Contact us today to get your questions answered and make sure someone is looking out for your best interests.