Westchester County NY Co-operative Transaction Attorneys
The Law Office of Ball and Ferrari PC represents buyers and sellers in the purchase and sale of cooperative apartments. We understand the needs and concerns of our clients and will protect your interests throughout the transaction.
We derive a great deal of satisfaction insuring our clients are making well informed decisions as they buy or sell a cooperative unit.
Cooperative apartments are frequently the easiest (meaning least expensive) way of entering the world of homeownership.
A Buyer of a cooperative apartment really doesn’t own the apartment, instead, co-operative apartment owners are technically shareholders of a corporation that owns the entire apartment building. The number of shares typically increase in relation to the size of the apartment. At closing, the Cooperative also issues a proprietary lease for the specific apartment, that allows the purchaser to reside that apartment. Technically, the apartment “owner” is a tenant where the landlord is the Corporation in which the apartment owner has an ownership interest evidenced by the stock certificate. The cooperative corporation is run by a board of directors that is elected by its shareholders, who are typically the residents of the cooperative.
A cooperative’s board of directors creates and enforces the Bylaws and House Rules that regulate every aspect of life within a cooperative building. These include whether or not you can sublet your apartment as well as whether, or how, you can renovate your apartment. A Coop Board has very broad powers which, at times, can seem overbearing, but are supposed to be for the common good of all shareholders.
Monthly maintenance fees include part of the underlying mortgage for the building, as well as the building’s real estate taxes and the cost of management, maintenance and repairs.
You may qualify for the basic STAR reduction of your proportionate share of the building’s property taxes, but will have to inquire with your particular Coop to see how they handle it. There may be additional fees that vary from parking, assessments, flip tax, storage, etc. The deductibility of a percentage of your maintenance can vary. You may be entitled to receive a tax deduction for a portion of your maintenance payment that is applied to the real estate taxes and interest on the underlying mortgage.
Most cooperatives have an Offering Plan, also called a Prospectus, which has been filed with the New York State Attorney General’s office. The Offering Plan, which is bound like a soft covered book running hundreds of pages, among other things, defines the unit’s description and the individual owner’s responsibilities for maintenance and repair. A careful review of the Offering Plan as well as Financial Statements and Budgets is essential in order to understand exactly what is being purchased or sold.
Purchasers of a co-op must submit an application to the cooperative’s Board of Directors for its review and approval. The Board approval process is often as intensive as the application made to a lender for financing. Frequent requirements are extensive information regarding finances, employment, and personal background. Most Boards also conduct personal interviews of prospective purchasers.
On the bright side, purchasers of cooperative apartments are not subject to the Mortgage Recording Tax and, rather than pay title insurance related expenses, pay a significantly lower amount for a lien search.