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.
If you’re considering purchasing a condo in New York City, it’s crucial to understand your rights to make the most out of your real estate purchase. At Sishodia PLLC, our experienced New York City real estate attorneys can provide guidance and personalized solutions tailored to your unique situation. Don’t let the complexities of condo ownership deter your real estate goals. Contact Sishodia PLLC today at (833) 616-4646 and let us help you make informed decisions and secure your investment with confidence.
Supply and Demand Means There Are Less Condos Available
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.
| Aspect | Co-ops | Condos |
|---|---|---|
| Legal Structure | Own shares in a corporation, proprietary lease | Own real property, deed reflects ownership |
| Availability | 75% of apartments for sale | Fewer available, higher demand |
| Ownership Type | Shares in corporation, proprietary lease | Real property ownership, deed |
| Monthly Fees | Maintenance fees, no mortgage recording tax | Maintenance fees, mortgage recording tax |
But What if You Are Not Looking for Modern?
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.
Condos Can Be More Expensive
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.
Buyer Closing Costs Are Higher for New Construction Condos in NYC
When purchasing a new construction condo in New York City, buyers should be prepared for higher closing costs compared to traditional resale apartments. Typically, closing costs for new developments can reach up to 6% of the purchase price, while resale properties usually range between 3% to 4%.
The increase in closing costs for new condos can be attributed to several additional fees that are unique to new constructions. These include the NYC Transfer Tax, which varies from 1% to 1.425%, and the NYS Transfer Tax, ranging from 0.4% to 0.65%. Additional charges may also include sponsor attorney fees, document fees, contributions to the building’s working capital, and potentially a contribution towards a super apartment or a residential manager unit in larger buildings.
However, it is important to note that these closing costs are often negotiable. The developer’s willingness to cover some or all of these costs depends significantly on their motivation, influenced by the building’s sales progress. Developers who have met their sales targets are generally less open to negotiation, while those eager to sell remaining units post-construction may offer more flexibility. Prospective buyers should consult with a real estate attorney to better understand their negotiating position and potentially reduce their overall closing costs. For a consultation, contact Sishodia PLLC today.
HOA Boards
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.
Do You Have More Questions About Purchasing a Condo in NYC?
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.
