I currently live in an affordable co-op apartment in Brooklyn, NY, owning 1 share of stock with the corporation. The board is in the process of

Asked by Cummingskl, Brooklyn, NY Thu Dec 12, 2013

Changing the occupancy agreement and the by laws to allow the cooperators to transfer or sell their apartments for the market value; however, there is a sale fee which will be voted on soon to be an amount equal to 50% of the the resale price. This amount is payable to the Corporation. After the dwelling unit is vacated and the Corporation performs such inspections and repairs as deemed necessary, the balance of the resale plus cost of any repairs are deducted and the balance is paid to the seller of the unit. For example, if my unit goes for $50K, my resale fee is $25k plus any repair costs to the unit.
My question is, is this normal practice in coop's?

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Rhonda Holt, Agent, New York, NY
Sun Jan 5, 2014
Selling co-ops are my niche for over 8 years in Brooklyn and I have never heard of any shareholder only having 1 share, never heard of a 50% resale fee usually its only 1-2% in fees closing, contribution and move out fees and there maybe an additional flip tax fee (this fee does not exist for all co-op buildings) that is usually 1-2% of the resale price.You need to get your hands on the offering plan which you should have and it will contain the by-laws any amendments to the bylaws and the proprietary lease. Either you or a real estate attorney can look it over for you for a small fee to tell you if the board has the right to make such extreme changes.

Better yet, The Business Corporation Law (BCL) is the main New York State law which governs how co-op corporations must operate. The decisions made by courts in cases involving BCL provisions are the case law which interprets the statute. You can find the BCL in libraries which is a great place to start to finding out if your co-op board is following legal procedures.

I hope this answer helped you and if you would like to speak to me more about it feel free to email me or call me directly.
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Christopher…, Agent, Brooklyn, NY
Sun Dec 15, 2013
I have been selling co ops for 15 yrs. in Brooklyn, Staten Island and Manhattan and some co op buildings do charge what they call a flip tax payable to them went you sell your unit, but i never heard of paying 50 per cent and not one co op i sold did the owner have to pay for any upgrades or repairs to the unit . The seller sells their unit AS IS... unless they want to fix a few minor things if they do so desire , BUT not necessary .....
Christopher Holmes
Licensed Associate Broker
Brooklyn,N Y
0 votes
Thank you for your expert advice.
Flag Sun Dec 15, 2013
Kathryn Lilly, Agent, New York, NY
Fri Dec 13, 2013
Yes, it is for the Government subsidized co-ops that you obviously did not pay market price for in the first place when you bought in.
Depending on what neighborhood you are in, it can be a windfall for many. You just need to work out if it benefits you to sell now or later as the building becomes more valuable as more market rate buyers move in.
The first sales will still be below true market value, compared to other free market co-ops in the neighborhood because it takes quite a few years for the culture or perception of the building to adjust. Plus the Banks willing to finance the first few sales will not be as many as more and more free market purchasers buy in.
Do not sell now just because you can get a bit of money, unless you where planning on moving now anyway. Even if you stay and the building appreciates to where you can sell your apartment for $400,000 and you have to pay $200,000 back to the building, it is $200,000 you otherwise would not have gotten. In order to sell something you have to have paid for it in the first place; in this scenario you are buying at 50% discount in effect except that you did not need to go out of pocket to buy it!
I hope this makes it clear, please feel free to call me if you need further information.

Kathryn Lilly, Broker
Realty on the Greene, LLC
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