Sdtrendy,  in New York, NY

Is a Condop better than a condo or a coop?

Asked by Sdtrendy, New York, NY Tue Aug 16, 2011

Is a Condop a good idea or is it the worst of both worlds?

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Mitchell Hall, Agent, New York, NY
Wed Aug 17, 2011
A condop is a condominium that has a residential coop unit separate from the commercial unit and or garage unit. During the late 1980's several new developments were built as "condops" they were "hybrids" because the developer had an underlying mortgage on the residential portion of the project. The residential unit is a cooperative. Owners are shareholders in a corporation.

The 80/20 IRS rule that restricted passive income over 20% of a coop's operating budget in any given year may be why some rental buildings with commercial/retail space converted to condops rather than coops. Many of those condops are run more like coops.

While the 80/20 tax law that affected coops was abolished by President Bush, today there are still new construction projects being built and recently constructed that are currently for sale as condops because there is an underlying mortgage.

A condo can not have an underlying mortgage so several new buildings are "condops" because in the offering plan the developer/sponsor leaves the shareholders/owners with the underlying mortgage. The underlying mortgage is included in the maintenance allocated proportionally to each apartment. The Azure and 1 Carnegie Hill on the Upper East Side are new condops and 305 West 16th street is a brand new luxury designer condop building in Chelsea and there is a new condop in Harlem.

Many condops have right of 1st refusal, they are investor friendly and have the same unlimited sublet policy and amenities usually found in condos. I live in a condop, I sell in the building and have sold in many condops.

A condop can offer the best of both worlds. It can offer rules and amenities of a condo, tax deduction, lower closing costs ( no NY state mortgage recording tax) like a coop because a coop is not considered "real property" it is considered "personal property."

Mitchell Hall, Associate Broker
The Corcoran Group
mhall@corcoran.com
1 vote
Jenet Levy, Agent, New York, NY
Tue Aug 16, 2011
Sdtrendy,
A condop is a type of entity that was invented to get around legal rules that don't exist anymore. There used to be something called the 80/20 rule. It meant that if a co-op derived more than 20% of its revenue from sources other than the maintenance of the shareholders, the shareholders would lose the tax-deductibility of the deductable parts of their maintenance. For example in the Village or SoHo, when the buildings started being able to collect enormous rents from the storefronts, it would be great for the finances of the co-op, but bad for the tax-deductibility of ownership of individual shareholders. That entity called a condop, sort of a hybrid of a condo and co-op, was created which got around this law by treating the entities of the commercial portion and the residential portions differently. The 80/20 law was abolished a couple of years ago, so there will be no new condops.
In practical terms, without expanding on the definition above, in most (not all) cases, the residential portion functions more like a condo than a co-op. This is not true in 100% of the cases though, as as I've come across a couple that were pretty strict with things such as subletting.
The best thing you can do is to work with a skilled, experienced agent who can help you decide, based upon your individual circumstances, which type of ownership is best for you. We can streamline your search, negotiate on your behalf and take you through the steps of buying. All the sellers have agents and you should too. There is no fee to you and your interests will be protected, as the listing agent works for the seller.

Best,
Jenet Levy
Halstead Property, LLC
jlevy@halstead.com
212 381-4268
http://jenetlevy.hastead.com for all NYC listings
0 votes
Janet Resino, Agent, NY, NY
Tue Aug 16, 2011
A condo, coop, or condop each have their own advantages. Besides the legal entity differences the basic difference between a condo and a coop is whether you can rent from day one and the financial information that is required to buy in the building. Condo's let you rent from day one, so do condops. All 3 will require board packages. The condo and the condop do not require an interview which is really not a big deal. A condo will allow foreigners and corporations to purchase. Condops may or may not allow them. Coops do not allow them in most cases. The closing costs are cheaper to buy a coop or condop than a condo. The price of condops are similar to condos whereas coops are less money. In NYC good condos, coops and condops appreciate pretty much the same. I always tell my clients to buy the apartment in the building that you love, taking into account the above mentioned differences if applicable.
Web Reference:  http://www.readyg.com
0 votes
Lisa Conway, , New York, NY
Tue Aug 16, 2011
Cond- Op is a coop with condo rules and is a fine choice if a condo is not available. You can have an investment property in a Cond-Op.
Lisa Conway, SVP Halatead Property
917-750-3088
Lconway@Halstead.com
0 votes
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