Buying real estate in New York City can be overwhelming and confusing. Depending on where you want to live in the city, you will most likely be looking at apartment housing in the form of co-ops or condos. While condos are more common in other areas of the country, here in New York City, 75 percent of apartments for sale are co-ops.
While both co-ops and condos are apartment units in larger buildings, their legal structure is quite different. A co-op building is owned by a corporation run by a board of directors. When you “buy” a co-op, you’re really buying shares in the corporation and getting a proprietary lease of the unit as part of the transaction. A condominium, however, is a true purchase of a real property. You are the owner of your unit and a proportionate share of the common areas and get a deed reflecting that ownership.
Speaking to a New York City real estate attorney can help you understand your rights in the real estate transaction. An experienced lawyer may also be able to help you make the most out of your real estate purchase.
Today, real estate in New York is pricey no matter which you choose, but between co-ops and condos, it’s often a matter of supply and demand. Because the majority of the real estate available in New York City is co-ops, it makes condos more difficult to find, and when you do find one, it may be out of your financial range.
The demand for condos is also higher because of their more lenient stance on investors, international buyers, and subletting. Add to that the more modern buildings with new and seamless amenities and condos are often the preference of those who can afford them.
Part of the charm of many of the city’s co-op buildings is their old-world charm and prime locations. Many are pre-war structures with sprawling hardwood floors and beautiful architecture. For those who want more character in their living quarters, the sleekness and modern architecture of newer condo buildings leave them cold, despite the updated amenities.
Finding older condos in the more desirable parts of the city can be difficult. If you do happen to find one, demand and prices will be high.
Because of their demand, condos can be more expensive. You are not only going to be paying more in purchase price but also in closing costs. Because co-ops aren’t considered real property, they are not subject to mortgage recording taxes at closing. But condos are. Mortgage recording taxes are charged at 1.80% of the mortgage if the loan amount is less than $500,000. If the loan is $500,000 or more, the mortgage recording tax will be charged at 1.825% of the mortgage.
In addition to monthly mortgage payments, taxes, and insurance, condos will also charge a monthly fee to unit owners for the maintenance, expenses, insurance, and other general upkeep of the building. HOA fees can and will go up periodically as the cost of maintenance and building expenses go up. If you find you are unable to keep up with your HOA payments, the condo has the legal right to foreclose on your unit.
While co-op boards can be notoriously fussy and demanding, some condo boards are equally so. Some condo boards operate similar to co-ops in an attempt to keep undesirable applicants out. One of the usual pluses of condo living is that HOAs are typically more owner-friendly. So getting involved in a condo with a very aggressive HOA can feel oppressive.
Whether a condo is right for you or not is often a matter of personal preference, aesthetics, and cost. Each building and governing group can have its own personality and it can help to work with a skilled NYC real estate lawyer who can offer insider insight.
If you need advice about purchasing real estate in NYC or are looking for an attorney who can go over your paperwork, contract, or closing documents, contact the New York City real estate lawyers at Sishodia PLLC. Contact us at (833) 616-4646 or schedule a consultation with us via our online contact form.