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COOPERATIVE
& CONDOMINIUM APARTMENTS IN MANHATTAN
* OWNERSHIP
* BUILDING TERMINOLOGY
* APARTMENT TERMINOLOGY
* HOW TO PURCHASE A COOP OR CONDO IN MANHATTAN
*
BOARD PACKAGES /INTERVIEW
* CLOSING COSTS FOR SELLER & PURCHASER
CO-OPS � Manhattan�s
Primary Housing Style
Co-ops, (short for �cooperatives�), are apartments owned
by a corporation. Individual tenants do not own their apartments in exactly the same way that they would a condominium or
a house. They actually own shares of stock in the corporation. These shares are apportioned based on the size and floor level
of their apartment, and ownership is established by a stock certificate and occupancy is governed by a �proprietary
lease.� The corporation pays all real estate taxes, maintenance expenses, and the underlying mortgage
on the building. The coop owner�s portion of the payment depends on the number of shares owned in the
corporation.
Cooperative ownership is the most common form of apartment ownership in New York City. There are three
times as many co-ops as there are condominiums in Manhattan, which means that there are more co-operative apartments on the
market and they are likely to be more affordable than similarly sized condominiums.
Basically, cooperative ownership
offers the same advantages with a few extras:
1. The tenant-owners elect a Board of Directors, whose responsibility
is to meet, interview and �approve� or �disapprove�
a prospective owner, thereby protecting the present tenants� interests by approving only qualified candidates.
2. Cooperative ownership offers a more stable community environment. Residents tend to stay for longer periods of time,
and few co-ops allow extensive subletting, preferring a high owner-occupancy.
3. A large portion of the monthly maintenance
fee paid by each shareholder is tax deductible, i.e. the pro-rata share of the cooperation�s real estate
taxes, as well as the building�s underlying mortgage payment.
There are some disadvantages,
however, in purchasing and owning a coop:
1. The board often requires a larger cash down payment. Usually prospective
purchasers are required to put 25% down. Some co-ops may require more. Many of the most exclusive buildings permit no financing
at all.
2. Most co-ops prefer owners to be occupants; therefore subleasing an apartment may be difficult. Each coop board
has its own set of rules, but generally speaking, subletting will have to be approved by the board, and permission is usually
granted for no more than 2 years. Some co-ops, however, are more flexible and are known as �easy boards�.
3. Owners are normally not allowed to use their apartments for professional or business purposes.
4. Almost all
renovations to individual apartments will have to be approved by the board.
5. Owners who wish to sell their apartments
will have to have the new buyer approved by the board through the application process.
Despite the disadvantages,
cooperative ownership remains a very popular option for residential ownership in Manhattan. Mitchell Hall, REALTOR can be
relied upon to guide you through the purchasing process.
CONDOS - CONDOMINIUMS
Owning a condominium in Manhattan
is the same as owning one anywhere else. It is a fee simple ownership, and the buyer receives a deed in a formal title transfer.
Monthly payments to the condominium are called �common charges,� and they are used
strictly for maintenance and upkeep of the jointly owned areas. Of course, the amount of interest on the owner�s
personal mortgage is fully tax-deductible.
Fee simple ownership gives owners the right to rent their apartment,
making it a better investment opportunity. Mortgage amounts can be as high as 90% of the sales price if the buyer qualifies.
Often there is not a formal application process, so the time from contract signing to closing is usually shorter.
CONDOPS
Condops are Co-ops with Condo Rules. The building is usually a condominium with both commercial and residential
units. The Commercial and Residential units together make up the condominium.
The Residential Portion of the Building
is a cooperative with shareholders and proprietary leases. The proprietary lease in a condop usually gives the board first
right of refusal to purchase an apartment and no Board approval. The board issues a waiver of first right of refusal the same
way as in a condo. Usually they have 30 days to exercise their right of first refusal or issue a waiver. Condops usually can
be sublet and are investor friendly. There is an underlying mortgage on the Residential Units. Condops usually require a 20%
downpayment. Condops offer the tax advantages of a Coop and the flexibility of a condo.
BUILDING TERMINOLOGY
BROWNSTONE
One to six floors. No doorman. Built in the late 1800s and early 1900s as single family homes.
Many were converted during World War II to create multiple apartments (3-10 units per building.) Brownstones have �charm,�
high ceilings, architectural detail, and usually wood burning fireplaces. Square footage is generally less than a similar
room count would provide in a doorman building.
ELEVATOR BUILDING
Located mostly in the mid blocks. Usually
six to nine stories; and many are found on side streets. Non-doorman building. Some pre-wars have an elevator attendant, and
many have intercom security and live-in supers.
LOFT APARTMENT
Four to eleven or twelve story buildings. Former
commercial buildings converted to apartments. Large open space. Usually an elevator (sometimes a freight elevator) but no
doorman service. Most are found in lower Manhattan in SoHo, Tribeca, or Chelsea. Some have restrictions regarding tenancy
such as status as a certified artist.
LUXURY DOORMAN
Twenty to forty or more floors, and a twenty-four hour
doorman. These are also postwar buildings. The more luxurious buildings also have a concierge who provides services such as
receiving laundry and packages. Some of these buildings have a health club and/or swimming pool and a parking garage.
PREWAR BUILDING
Ten to 16 floors. Doorman or non-doorman. Built 1900�s to 1940s. Exterior and
interior architectural detailing. Common features include high ceilings, hardwood floors, arched doorways, or fireplaces.
Most are co-ops.
POSTWAR BUILDING
Built from 1946 through today. Exteriors are usually white, red, or brown
brick. Usually less expensive than pre-wars. Long corridors with many apartments per landing. Eight foot ceilings, big closets,
and small kitchens. Laundry facilities are usually in the basement.
WALK-UP BUILDING
Up to five floors. No
elevator or doorman. Originally built as multi-family housing, this is one of the cheapest apartment options. Sometimes called
�railroad flats,� these apartments can also be very charming compared to newer buildings.
APARTMENT TERMINOLOGY
ALCOVE
An area adjoining the living room space which can be used for a dining
area or be separated or closed off to make a bedroom, den, or office.
CONVERTIBLE, FLEX, OR JUNIOR
An
apartment with a larger alcove off the living room which can be converted to another bedroom, or which can be used as a dining
area. A �convertible two-bedroom� or �flex two�
is a one-bedroom apartment with a large alcove and 1 or 2 bathrooms.
FURNISHED UNITS
Units which are fully
equipped with furniture and amenities. Apartments are available for long and short-term use.
JUNIOR
An apartment
with a small alcove off the living room which can be converted to a small bedroom or used as a dining area. A �junior
4� would be a potential 4-room apartment: living room, bedroom, kitchen, and alcove area (bathroom is
not counted as a room.)
LOFT AREA
Sometimes found in apartments with high ceilings. An upper area which has
been built for storage or as an extra sleeping area or living area.
STUDIO
A studio is a two-room apartment
(the kitchen is considered one room). An �alcove studio� is a studio with an alcove
for dining or sleeping. A studio with a windowed alcove large enough to be a bedroom can be referred to as a �junior
one-bedroom� or �junior 3� (three rooms).
ONE-BEDROOM
A one-bedroom is a three-room apartment (kitchen, living room, and bedroom). A one-bedroom with a windowed alcove large
enough to be a bedroom is called a �junior 4� (4 rooms), �flex
2� or �convertible 2� (convertible to two bedrooms).
TWO-BEDROOM
A two-bedroom can be a four, five or six-room apartment. A �flex 3�
or �convertible 3� is a two-bedroom apartment with space for an additional room
(third bedroom, dining room, den, maid�s room, etc.).
CLASSIC
A classic is an apartment
in a pre-war building, which has a formal dining room, 1 or 2 baths, and, in a larger apartment, 1 or 2 maids�
rooms. A �classic 6�, for example, is a 6-room apartment in a pre-war building that
has a living room, formal dining room, two bedrooms, kitchen, maid�s room, and 1 or 2 bathrooms. In the
larger classics, it is common to find the smaller maids� rooms combined into one larger room. Frequently,
pre-war buildings have been gutted and �rehabbed,� but room counts and layouts will
usually be listed according to their original configuration.
HOW TO PURCHASE A COOP OR CONDO IN MANHATTAN
1. Start out with a neighborhood choice and a budget in mind.
2. Consult your Realtor, mortgage broker
and/or banker regarding a mortgage. (If you need to know how much you can afford, find out BEFORE looking.)
3.
Select a real estate attorney, someone who specializes in Manhattan co-ops and condos. Suburban lawyers or lawyers who specialize
in other fields can spell trouble or delay.
4. Discuss with your broker a negotiating strategy and make an
offer. In New York City, offers are submitted verbally, and negotiations proceed back and forth over the telephone and may
be confirmed in writing until all aspects of the sale have been agreed to�price, amount to be financed,
occupancy date, closing date, disposition of lighting fixtures, etc.
5. Accepting the offer: There is no legal
obligation between buyer and seller until a contract is signed. In a hot market, this process should move quickly.
6. Gain information about the building you�ve chosen�its financial and physical
condition, its history as a coop, etc. Your agent and your lawyer will guide you in this process and your attorney will go
through the �due diligence process�.
7. Going to contract: The seller�s
attorney prepares the contract and forwards it by messenger to your attorney. Both attorneys consult and agree on all points.
8. Signing the contract: You sign it first, then it�s sent back to the seller�s
attorney to obtain the seller�s signature. A down payment is expected at this point�usually
10% of the contract price, which is held in the seller�s attorney�s escrow account.
9. Complete the mortgage application, if any.
10. The bank that is providing the mortgage will arrange
to have the apartment appraised.
11. Prepare the board (or condo) application.
FOR A COOP:
12. Consult with your Realtor first, and then begin preparing the board application package. (See How to Prepare a Board
Package.)
13. Submit completed board papers, along with mortgage commitment letter to your REALTOR..
14.
Coldwell Banker Hunt Kennedy managers thoroughly review the package.
15. Board package is submitted to the managing
agent who then orders the credit
check, and forwards the application to the board members.
16. Some or all
of the board members interviews purchasers. Your salesperson
will be your guide.
16. Board approval is obtained.
FOR BOTH CONDOMINIUMS AND CO-OPS:
17. Closing is arranged by the seller�s and
buyer�s attorneys, in conjunction with the
lender.
18. Move-in time is coordinated with
the building�s superintendent.
19. The entire process can take between 2 to 5 months.
HOW TO PREPARE A BOARD PACKAGE
A major aspect of purchasing a co-op apartment is completing a purchase application
and assembling financial documents and references, which together are commonly referred to as �The Board
Package.� First time co-op buyers are often shocked by the amount of confidential material required by
boards. Just be assured that the information is kept confidential.
The primary purpose of the Board Package is
to assure the corporation of your financial ability to carry the apartment (boards are tougher than banks) and to give them
confidence that you will be a �cooperative� shareholder and a welcomed member of
their community.
Each co-op has its own set of requirements and application form which your Realtor will obtain
for you from the building�s managing agent.
OUR TWO MAIN RECOMMENDATIONS ARE THESE:
� Read the instructions on the cover page carefully and plan to provide ALL the information requested.
Your agent will �translate� some of the items for you.
�
Be sure your application, references, and supporting documents are neat and clear.
THE MOST COMMON ELEMENTS OF
A BOARD PACKAGE ARE:
1. Purchase Application�Should be typed. Fill in all the blanks and answer
all questions: name, address, social security number, name of attorney, schools attended, etc.
2. Credit Release Form�Your
permission for the managing agent to obtain a credit check on each applicant. Just sign it.
3. Contract of Sale�A
copy will be acceptable.
4. Financial Statement�A blank form is usually provided in the package.
Basically a statement of all assets and liabilities AND supporting documents, it is VERY important that all sums on the statement
reconcile with the attached supporting documents. For instance, don�t list a checking account balance
as of January 1, and then include the February statement as backup. Every item on the statement (except for personal property)
needs documentation.
5. Reference Letters�A combination of personal and business references.. Please
ask your friends and associates to be specific and glowing in their comments. These letters are an opportunity for a Board
to �get to know you.� They also provide subjects for the interview discussion.
6. Tax Returns�Many co-ops require the last one or two most recent Federal tax returns.
7.
Landlord Reference�Verifying your past prompt payment of rent or maintenance charges.
BOARD
INTERVIEW
Approximately two weeks after the completed Board Package has been submitted to the managing agent, you
will be called for an interview. If your schedule has unusual constraints that would limit your availability for meeting with
the board, your broker will indicate this the cover letter for the board package.
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