Tips to Buying a Co-op in Manhattan
So you’re ready to buy a place in Manhattan, but you’re a bit confused as to the differences between a co-op and a condo. Although they may appear the same, they do function differently and the process of buying and owning a co-op will be different than that of a condo. If you’re interested in purchasing a co-op in Manhattan (and 80 percent of units for sale in Manhattan are co-ops), read on for tips to help understand the process.
What is a Co-op?
While a co-op appears to be real estate, it is, in fact, not. When you buy a co-op, you are not buying real estate. You are buying shares of stock in a cooperative corporation. That allows you to reside in a specific apartment in the building under the terms of the proprietary lease. Since it is not real estate, taxes are not assessed for each apartment. Instead the entire building is assessed and each tenant-shareholder pays a portion of those taxes. Tenant-shareholders also pay a portion of the operating expenses of the building.
How a Co-op is Managed
A co-op is managed by a Board of Directors, usually comprised of building residents. The Board of Directors makes all the decisions related to the building and the rules of the building. The Board has the ability to turn down potential buyers or sub-leasers, and are not required to give a reason.
When looking for a co-op, it’s a great idea to know more about the board of the building before deciding to take the plunge. Some boards can be very conservative, almost oppressive, and make life pretty miserable. Nearly all co-ops require an interview before you can purchase, and you’ll be required to share all your personal financial information, in detail. Be aware, however, that some co-ops are beginning to act more like condos to make them more competitive in the market, and may not impose such strict guidelines or restrictions.
Advantages of a Co-op
There is one big advantage to being the owner of a co-op. Co-op owners are considered “tenants” under New York law, and are afforded the same rights as any other tenant. If you have a dispute with a neighbor or with the apartment corporation, you’ll have the same rights and protections that apply to any other tenant-landlord relationship in the state.
“Warrant of Habitability”
Under the “warrant of habitability” in New York law, all tenant residences and buildings are required to be “fit for human habitation”. This means they are free from any dangerous or detrimental conditions. If your building falls short, under this law you’ll be entitled to compensation such as an adjustment in your maintenance fees. It can be used as a great negotiation tool when engaged in a dispute with the Board of Directors of your co-op, and make a settlement easier to reach.
Know What You Want
For the reasons stated above, it’s important for you to know whether or not co-op life is right for you before deciding to purchase a co-op unit. Take time to check out the Board of Directors to understand the particular environment within a building. Understand and make sure you’re comfortable with revealing all your financial information, and make sure they are comfortable with the information they receive. In most cases, if you do your homework, you’ll find a co-op that’s right for you.