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Sonny, Home Buyer in New York, NY

What are the resale/sublet restrictions for an HDFC coop in Alphabet City?

Asked by Sonny, New York, NY Mon May 19, 2008

It's a 2b HDFC coop in alphabet city going for $450k. Is this price high for an HDFC apartment? Because it's HDFC, does that mean it will always stay HDFC? I plan to live there for 5 years but eventually sell to move out of the city.

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Sublet rules depend on the board - while the city guarantees renters the right to sublet for a term of a lease, owners in coops are bound by the board rules.
The city considers HDFC's primary residences:
A primary residence by city standards means you must spend 183 days per year there.

More frequent arrangements at coops are typically this: You can rent it out consecutively two years max, but then must live there for one; repeat: rent two years, live there one.

That one year is frequently left vacant by some rule-abiding owners, but other owners try to keep tenants in. Bad news on that front though.

The board can retaliate (especially if you didn't ask permission or 'special circumstances' first), and it runs the risk of having you nominated for getting the boot.

Leaving the unit just vacant for several years also can endanger your ownership status, as many buildings want a participating shareholder, not an absentee, whether as a landlord or otherwise.

Many shareholders that move have their kids move in, and that's legit as long as its board-approved.
Web Reference: http://www.uhab.org
0 votes Thank Flag Link Wed Feb 11, 2009
Also - yes, an HDFC will always stay an HDFC, as it's got a regulatory agreement with the city for having been given tremendous tax breaks over several decades. The building's only way of paying that gift back is to stay affordable by law.

The only exception is if a Mitchell Lama rental transformed into an HDFC, and then decides to "go private" which means, sell out to go market. That usually saddles the owners with insane leaps in maintenance charges and leaves them with no control over costs, but people do it for that cash-in opportutnity.
0 votes Thank Flag Link Wed Feb 11, 2009
Hi Sonny,

I know my response is outdated and possibly useless now given the market but I'll post it for other buyers:

The reason the price seems so high for an HDFC is simple: This HDFC has broken the law, in a manner of speaking. By law, all HDFCs are mandated to serve a low-income (now median-income) population, and the way that used to be enforced was by putting buyer-income caps on the buildings.

It wasn't hard for building residents who inherited apartments and wanted to resell at market to get around that: Find recent college grads or trust fund kids with low or no income to buy the units but list those units at "market" rates (or as close to market as you could fetch). Or sell to foreign buyers who could claim no income or very little income.

It's broken the whole ethics behind HDFCs, which are very heavily subsidized by huge, 40-plus year tax breaks, and made them cash cows for some people.

The way around it? Don't buy in those HDFCs that refuse to follow the rules. They'll find their market of buyers is starved, and stop overpricing these units, which were designed to be perpetually affordable. That said, you can't cash on it yourself if you buy a traditional HDFC - since those are the ones following the guidelines set out by the HDFC mandate.

I can't say if it's high for the building, but yes, it's exorbitantly high for an HDFC. You can sidestep this mess and buy a unit in a building with resale limits, which will have affordable prices (in the tens of thousands) and a limited increase in property value that goes up slightly year by year.

You won't get to retire on the savings, but you can pay for your kids college, start a business, buy a timeshare, or take vacations twice a year as a result of your savings. HDFCs are for working New Yorkers - too sad that so many are willing to sell out for one person's wallet to get thicker. Visit http.uhab.org for more on HDFCs and uhab.coop for HDFC listings of sponsored units and private market listings.
Web Reference: http://www.uhab.coop
0 votes Thank Flag Link Wed Feb 11, 2009
IS IT ON 3RD STREET IN ALPHABET CITY OR 4TH STREET?
0 votes Thank Flag Link Wed Feb 4, 2009
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