Buying Cooperative or buying a Co-op in New York
Cooperatives also known as co-ops are the most common type of apartment in Manhattan. In Manhattan, 85% of all owned apartments are co-op and almost 100% of prewar apartments on Park Avenue, Madison Avenue, Fifth Avenue and Central Park West are in cooperative buildings. Co-ops are buildings that function as a corporation. When you purchase a co-op apartment, you are indeed buying shares of a corporation which entitles you, as a shareholder, to a "proprietary lease" of the specific unit you are interested in.
The larger the apartment, the higher the floor and view, the more shares within the corporation you will own. Co-op shareholders, have to pay a monthly maintenance fee to cover the building expenses which include heat, hot water, insurance, staff salaries, real estate taxes and the mortgage on the building.
Part of the monthly maintenance fee is tax deductible due to the building's underlying mortgage interest and real estate taxes. Each co-op has a board of directors which determine the set of rules that will be applied in the building. The board can decide how much of the purchase price may be financed, if pets, sublets, or washer/dryers will be permitted, increase in maintenance among other issues.
All building rules and regulations should be viewed carefully before a purchaser signs his/her contract. Additionally, the Board of Directors gives their approval or rejection of the sale to a potential buyer based upon the purchase application or board package.
See Condominium Apartments to compare the benefits of purchasing and owning a Co-op vs. a Condo.
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