Whether you’re a new or experienced buyer in New York, understanding the nuances of the condo vs coop market is essential when looking for your dream apartment. Beyond the obvious cost of the purchase itself, there are NYC property taxes and monthly maintenance fees to consider, each varying significantly between condos and co-ops. Then, there are additional costs, like a down payment and homeowner’s association (HOA) dues, if applicable. Finally, there are the closing costs—which can easily add up to a few thousand dollars for both condos and co-ops.
The question that many buyers have is: “Should I buy a co-op or condo?” There are pros and cons to each type of property. In the condo vs coop debate, co-ops offer a more structured environment, while condos are typically newer and have more amenities. However, it really comes down to what is most important to the individual. In our latest article we discuss the differences between buying a condo or co-op in New York.
What Are the Differences in the Approval Process for Condos and Co-ops?
The main difference in the approval process for condos and co-ops is that condos usually have a less stringent board review than co-op buildings, a crucial aspect to consider in the condo vs coop decision. The reason for this is that co-ops are usually older buildings and have fewer modern amenities. While some co-ops have upgraded their amenities, they still lag behind condos.
Co-op vetting also tends to be more strict, especially when it comes to financial matters. This increased scrutiny in the co-op approval process is a key factor in the condo vs coop comparison. The board will want to ensure that a potential shareholder can afford the monthly share price. Additionally, the board will want to make sure that they can manage the building’s expenses and maintain a high quality of life for the shareholders.
This vetting can take anywhere from two to six weeks. However, it is important to remember that the longer the approval process goes on, the more expensive the share price becomes. In some cases, the board may even decide not to approve the sale of a unit if it is deemed too expensive, a factor to weigh in the condo vs coop consideration.
Lastly, condos often have a shorter sponsor application and financing process than co-ops. The reason for this is that condos are newer, and they tend to be concentrated in the higher end of the market. Plus, most condos are “sponsor” units—they’ve been sold straight from the developer or original owner. This makes the buying process much simpler than for co-ops, which have a more lengthy sponsor application and financing process, another point to consider in the condo vs coop debate.
The bottom line is that condos are more expensive than co-ops, but the buying process is much easier. Additionally, a condo may offer a more luxury living experience, which can be worth the extra expense.
One of the best things to do when deciding between a condo and co-op is to speak with your attorney about the individual buildings you are interested in. Ask your attorney to provide details on the board’s history, what amenities they have, and if there is any discretionary spending that you can expect in the future.
Purchasing real estate in New York City presents a unique challenge, especially when it comes to the condo vs coop decision. Buyers must consider various factors such as setting their budget, determining must-have features and amenities, finding financing, and deciding whether a condo or co-op suits their lifestyle better. The type of property purchased also impacts financing options and closing costs, making the condo vs coop choice a significant one.
While co-ops do have great resale value, the process can be lengthy and difficult, particularly because the board often requires substantial down payments. They also tend to have expensive monthly fees and strict rules about subletting, factors to consider in the condo vs coop comparison. Conversely, condos are more flexible in terms of resale and lending, have lower maintenance fees and closing costs, and allow owners to rent out their units without board approval.
A key difference in the condo vs coop debate is that a purchaser of a condominium receives an actual deed to the apartment they’re buying. Unlike co-ops, where the taxes are rolled into monthly “common charges,” condo owners receive a separate property tax bill.
Co-op owners, conversely, own shares in a private corporation that owns the co-op building and the individual apartments within it, a notable point in the condo vs coop discussion. They also receive a proprietary lease, which grants them the right to occupy the specific apartment they’re purchasing. Co-op fees are typically higher than condo fees, as they cover the cost of building upkeep, utilities, staff salaries, and other expenses.
Prospective purchasers will need to navigate the co-op’s board approval process, which can be extremely difficult and may challenge even the most qualified applicants. This rigorous vetting process is an important consideration in the condo vs coop choice. Poor finances, lackluster credit or job history, and a seeming lack of stability are just some of the reasons that a co-op board might deny a purchaser.
Finally, when considering condo vs coop, it's important to note that each neighborhood in NYC has a different inventory of condos and co-ops. A knowledgeable New York real estate attorney can be invaluable in helping a buyer determine which type of property, condo vs coop, is best for their needs.
New York City has a plethora of real estate options to choose from, including condos and co-ops. When considering investing in the city, one must carefully evaluate the condo vs coop options, as they have distinct differences. For example, investment-minded buyers may find it easier to generate rental income with a condo due to a less stringent approval process and greater flexibility to rent out units. On the other hand, a buyer seeking lower monthly payments may prefer a co-op in lieu of a traditional mortgage.
Purchasing a home can be an exciting and rewarding experience. But if you are new to the market, weighing your buying options in the condo vs coop landscape can be challenging. Condo and co-op properties are the two major building types that make up the majority of NYC’s housing inventory. Standing on the sidewalk or perusing listings, it can be hard to discern which property type you are looking at. This is especially true when you are trying to determine whether or not a particular apartment is a condominium or a cooperative (or “co-op”).
In a Condominium, residents own real property with a deed, just like homeowners in the suburbs. The residents also own a share of the corporation and have rights to use common areas in the building, similar to shareholders in a stock. However, when considering condo vs coop, the condominium board maintains the right to refuse or institute rules and regulations that are not in line with the overall vision of the building.
Co-ops are not as common as condos, but they still account for a large percentage of the city’s housing. In the condo vs coop comparison, when you are in a building that is a co-op, the owner-residents buy proprietary leases from the company that owns the building. These leases grant them the right to occupy one or more apartments in the building, according to the amount of shares they purchased. Co-ops usually charge property taxes on the corporation, while individual residents are charged based on the number of shares they own in the corporation.
Both condos and coops require an extensive application and a thorough approval process. The process can be longer and more complicated for co-ops because the boards want to ensure that potential tenants can afford the monthly fees, and that they are financially sound enough to maintain the property if their circumstances change. This aspect of the condo vs coop decision, where it is not uncommon for a co-op to have higher requirements than a condo, is crucial for potential buyers.
While condos offer more flexibility to investors, it is important to consider your personal goals before deciding which option is best for you in the condo vs coop debate. A good real estate attorney can assist in evaluating your needs and finding the property that is right for you. If you are looking to buy a property in the NYC area, contact us to discuss your options and get started on your home search. We look forward to working with you.
Avenue Law Firm
360 Madison Ave, 9th Floor, New York, NY 10017
(212) 729-4090