Home Buying in Chelsea>Question Details

Kate Pan, Home Buyer in Chicago, IL

Hi, does the HOA includes property tax? thx

Asked by Kate Pan, Chicago, IL Fri Aug 2, 2013

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No link is visible, is the property a condo or co-op; in a co-op taxes are included in the monthly maintenance, whereas in a condo they are paid separately....
0 votes Thank Flag Link Sat Aug 3, 2013
I am not certain if the reply function to an answer sends an alert to the poster- and I still had this page open- so I noticed Kate's follow up question.

I am treasurer for my Manhattan condo- so I am able to answer your question.

Let's be clear- first off, if you buy a condo or a coop- you are an owner- there is no landlord. Assuming there is no sponsor (typically the developer of the building) still involved in the building- the Board of Managers is made up of fellow owners that volunteer to help run the building (typically higher level policy decisions) . The Board of Managers in conjunction with the Managing Agent (which deals with the day to day management of the building and may provide guidance on policy decision) figure out the cost structure to run the building.

The monthly fee's that you pay for things like elevator maintenance, the super, heat, water, etc and compliance with NYC building code requirements that change every year- and are extremely expensive. So when the Board of Managers increases the monthly Common Charges or Maintenance, it's rarely because they want to but because they have to. The cost of Water alone has been increasing by 15% a year for a number of years now. Remember the Board is compromised of fellow owners- so they are voting to increase their own costs as well.

If you buy a co-op, most buildings have a mortgage- which helps the building undertake large projects easily. Maintaining a building in a city is far more complex than maintaining a townhouse community out in the suburbs. This mortgage component is seperate from the mortgage you would seek to purchase an individual apartment. This is different from a condo, where it is very uncommon (though not impossible) for the building to take out a loan/mortgage. Typically in a condo the building should either have reserves to account for these large projects (with the money funded as part of your common charges) or via a special assessment. One way or another if you were to compare two apartments side by side- identical in all ways except one is a condo and one is a co-op, the monthly maintenance vs. common charges+property tax should be rather similiar.
0 votes Thank Flag Link Fri Aug 2, 2013
Thank you! But one scary thing about owning a co-op is that if an ass tenant over use water, utilities, all other owners would have to share this risk on outrageous bills?! or we can protect ourselves in the leases; put an expense stop clause.
Flag Sat Aug 3, 2013
I am managing/ an owner of a small building of 12 apartments in Hamilton Heights (north-west section of Harlem)- which is a dramaticaly different neighborhood than Chelsea. We are seeing lots of people move from all parts of the city (Chelsea included) into the neighborhood, priced out of prime neighborhoods. I am not a broker, so I am not here to sell you anything- I just enjoy educating. I haven't been following pricing in Chelsea, but I would imagine that prices down there are over $1,000 sq/ft- whereas in Hamilton Heights you can find many apartments less than $500 sq/ft- though Hamilton Heights is much further away from the prime business districts of midtown and downtown.
Flag Fri Aug 2, 2013
Thank you very much! : ) helpful.

which building are you managing? any properties for sale?
Flag Fri Aug 2, 2013
Kate,
When you are dealing with NYC, it is imperative you do not take advice from anyone outside NYC, whether the suburbs or another state. There are many nuances here that are very different than anywhere else.

In NYC, we don't have "HOA." There are two kinds of apts. you can own: co-ops and condos. In a co-op, you don't technically own real estate. You own shares of the corporation that entitle you to occupy the apt. Your monthly fee is called "maintenance" which is made up of 3 components: your share of the underlying mortgage, your share of the real estate taxes, and your share of the upkeep of the building. The underlying mortgage is the mortgage the developer took out to buy the rental building and convert it to apts. you can buy. In the alternative, when you own a condo, which is also an apt. here in NYC, you actually own real estate. Therefore, the monthly charges are different. You pay two separate charges: real estate taxes and common charges. Common charges are your share of the upkeep of the building. As alluded to in other responses, there are other differences, but I am answering your question directly.

I would also like to emphasize that it is critical you work with a skilled, experienced agent. We take you through all the steps of purchasing. It saves you time, money, aggravation and mistakes.

Best,
Jenet Levy
Halstead Property, LLC
jlevy@halstead.com
212 381-4268
http://jenetlevy.halstead.com
0 votes Thank Flag Link Fri Aug 2, 2013
Thanks for your reply!So basically i can't take out my own mortgage against the co-op I'm gonna buy; and the landlord can increase management fee anytime in the general operating cost, right? thanks!
Flag Fri Aug 2, 2013
Hello Kate,
This depends upon the type of property. With a condo the taxes are paid separately. Here in New York city we have many coops. With a coop the property tax is included in the monthly fees, along with maintenance and all or a portion of the utilities.

Best wishes,
Gail
0 votes Thank Flag Link Fri Aug 2, 2013
Hi, the common charges and property taxes are billed separately. The taxes are through the town and common charges through the condo management.

Chris
0 votes Thank Flag Link Fri Aug 2, 2013
You are assuming a condo structure- the original poster did not state whether this was indeed a condo (and few people outside of NY are familiar with co-op's). In co-op's the property taxes are included in the monthly maintenance charged by the co-op.
Flag Fri Aug 2, 2013
No - in condominiums they are separate. in cooperatives they are and the taxes are paid by the board of directors.
0 votes Thank Flag Link Fri Aug 2, 2013
Ignore the out of town broker- because the advice provided is inaccurate for NYC (and this question was under Home Buying in Chelsea). In New York City- there are two types of apartments for purchase- Condo's and Coop's (there are also Condop's- but they fall into the Coop category). If the apartment you are looking at is a Condo- the HOA fee's are called Common Charges (CC's). The condo does not include property tax as part of the Common Charges. If the apartment is a Co-op, the monthly carrying charges are called Maintenance- which includes both the equalalent of your HOA fees plus the property tax. Buying in NYC is far more complicated than buying anywhere else in the U.S. and you need to understand the nuances involved here. There are pro's and con's to each type of apartment structure- but generally speaking condo's sell at a premium to coop's.
0 votes Thank Flag Link Fri Aug 2, 2013
I've heard; some do, some don't.
You need to research this and many other facets of your prospective HOA:
Checking on the fees is not good enough;
some HOAs can;
raise the fees regularly,
enforce draconian rules for residents
make life in the compound unlivable,
make selling a nightmare.

Maybe visit the complex and talk to your future neighbors; see what they say.
0 votes Thank Flag Link Fri Aug 2, 2013
thanks Ron! very knowledgeable.

then the HOA should have a solid voting body to restrict raising unreasonable fees.
Flag Fri Aug 2, 2013
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