Itâ€™s what makes New York so special! Youâ€™ll be a sharecropper, I mean a share holder. That means the apartment is yours, but you donâ€™t really own it. Well you own it; but you donâ€™t get a deed, instead you get a lease. But the great thing about a co-op lease is that there is absolutely no rent, just a monthly maintenance fee; which covers all the salaries of the super and the doorman. And the great thing about this is with a few hundred dollars at Christmas, theyâ€™ll fix anything.
And then thereâ€™s the co-op board of directors â€“ a group of your neighbors whoâ€™s job it is to protect you. They decide what you can and canâ€™t do, can and canâ€™t change, and who you can and canâ€™t sell to â€“ because thatâ€™s what theyâ€™re not paid to do! If you want to put in a dishwasher theyâ€™ll make sure itâ€™ll work by having the building engineer review the plans your architect submits. Heâ€™ll bill you by the hour and tell you that you canâ€™t do it. But donâ€™t worry, you can pay the super to sneak it in. Just make sure the box doesnâ€™t say dishwasher!
In short, a co-op is a one of a kind thing. And when you decide to sell the apartment, you have the right to sell it to whomever you want, as long as your neighbors like the person you want to sell it to. Your buyer just like you will have to submit of course a list of his personal assets, liabilities and income. And six full copies of his last two years tax returns.
Okay? Great, hereâ€™s a pen!
A co-op apartment is a unit of housing that a person is allowed to occupy after purchasing shares in the corporation that owns the cooperative. Instead of actually buying the property, the resident only buys into a corporation â€” in the US, usually a Limited Liability Corporation (LLC) â€” that owns the building. There are both advantages and disadvantages to this type of living arrangement, but many co-ops are considered highly desirable properties in Manhattan. Often compared to condos, co-ops differ greatly in the method of ownership and in the residency application process.
People can buy shares of the corporation, which entitles them the right to live in a specific unit of the building and a vote in matters concerning the cooperative as a whole. Generally speaking, the larger the apartment, the more votes the owner has. Cooperatives generally elect or have every member participate in a board of representatives, which handles issues and enforces the bylaws of the co-op. Residents must also pay a monthly maintenance fee, which goes towards paying the mortgage for the co-op building and covers maintenance fees, insurance, real estate taxes, some utilities, and the salaries of any building staff.
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When you own a co-op, you own shares in the corporation that owns the building. Those shares entitle you to a proprietary lease which allows you to occupy the apartment. The board of directors (the board) makes rules regarding guideliness for purchase, pet policy, sublet policy, etc. What you pay monthly is called maintenance and is made up of 3 parts: your share of the underlying mortgage, your share of the real estate taxes, and your share of the upkeep of the building. This is different than a condo, where you actually own real estate. To purchase a co-op, there is an application process which involves sharing all your financial documents as well as letters of recommendation, etc. An interview is also generally required. This "board package" is submitted to the managing agent after the seller has accepted your offer and you have secured your loan commitment.
If you are considering purchasing a co-op, I would strongly suggest you use a skilled, experienced agent to guide you through the process.
Halstead Property, LLC
Accredited Buyer Representative
Co-ops have boards, somewhat the same way that condos do. But with a co-op, they have the right to either approve or deny the sales. Approval is usually based to minimum set downpayment requirements (usually at least 20%), your financial situation, credit, among other things. I've seen some people get denied because they're self-employed, I've seen other co-ops who have lower standards that lend themselves to a broader range of first time home-buyers.
Consider meeting with a Loan Officer who is experienced with co-op lending and get pre-approved. I'm always available to meet at our NYC offices if you're in need of a dependable Loan Officer. Good luck!
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STERLING NATIONAL BANK
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You do not receive a deed to the property, as you would if you were buying a "condominium" or a single family home.
There will be more restrictions as to what you can and cannot do, as there is a a "coop board" that must approve any changes you might want to make...... and any buyers when you go to sell.
Many boards have strict financial requirements for anyone wanting to buy there...some are more lenient than others.
Coops sell somewhat lower than similar condos.
Your monthly carrying charges will include maintenance and your percentage of property taxes.