There are significant legal and practical differences between condominiums and cooperatives (co-ops) in New York.
Unlike a condo, when you purchase a co-op, you are not purchasing real property. You are buying shares of the company that owns the building. And instead of a deed, you receive a proprietary lease and have the right to occupy a specific apartment.
One advantage of co-ops is they are generally cheaper than condos. Although purchasing a co-op may require a high down payment, co-ops generally require much lower closing costs than condos. That is because co-op buyers do not have to pay fees like title insurance, title searches, deed recording fees, or the mortgage tax.
However, advantages of purchasing a condo instead of a co-op include the ease of obtaining a mortgage. Mortgage lenders are often more willing to issue a loan to condo buyers than co-op buyers. Condos also often require lower down payments than co-ops, which can require very high down payments. And condos are often are much easier to sell or rent than co-ops. Condo owners own the property and do not have to obtain approval from a board. Although the condo board of managers will often have to waive the right of first refusal for you to sell the condo, the approval process is often less stringent compared to the co-op board approval process and interview for potential co-op buyers. Co-op boards often have authority to reject a buyer for any number of reasons, such as the offer amount. The co-op board can reject a prospective transaction, for example, because the board believes the offer price is too low.
Condos and co-ops each have pros and cons. Co-ops may be cheaper upfront and may be a good choice for long-term residents. A condo, however, may be easier to rent out or sell. Your practical or investment goals should be considered first. A skilled real estate attorney can help clarify the pros and cons of condo v. co-op ownership. Call James H. Cook, Esq. at (646) 844-0425 for a free consultation.
James H. Cook, Attorney at Law 