How to purchase a condominium in NYC
Introduction to Purchasing A Condo in NYC
Residential real estate in New York can be classified into three main categories:
- Townhouses/Brownstones and multi-family
The difference between a Condominium and an apartment complex is entirely legal. There is no way to visually distinguish a Condominium from an apartment or a Cooperative. What defines a Condominium is the form of ownership. A Condominium is a structure of two or more units. The interior space is individually owned while the remaining property, that is, the common elements, are owned in common by the owners of the individual units. Purchasing a Condominium is very much like buying a single-family house. A deed to the apartment is received that grants the Purchaser Ownership.
Much like a Cooperative owner, a Condominium resident also has the right to elect the board of directors. Generally, however, Condominium Boards tend to be far more lenient as Condominiums’ By-Laws are less strict. The By-Laws, Declaration, and Rules of a Condominium set for the following: (1) the powers and duties of the Board of Managers, (2) meeting dates and election process for unit owners, (3) the quorum of voting, (4) sublet provisions, (5) method for amending Declaration or By-Laws, (6) the obligation to repair, and (7) pet restrictions, if any. It is because a Condominium owner actually owns the unit, that the Condominium board is less capable of enforcing evictions. Perhaps the most significant restriction that sets apart a Condominium from a Cooperative is that Purchasers of a Cooperative unit cannot freely sublet. Most Cooperatives have strict policies on subletting. Normally, there is a fee for subletting and a limit of one to two years during a five to seven year period. This could be particularly unsuitable for individuals with professions that demand much travel or if one must suddenly relocate. Clearly, then, there is generally a lower degree of autonomy that a Cooperative purchase entails. Nonetheless, there is a trade-off. While Cooperatives tend to have such regulations, they also tend to be cheaper than Condominiums. In fact, in the first quarter of 2014, Condominium Purchasers accumulated over an average of $1,591.00 per square foot in Manhattan, approximately 30% more than Cooperative Purchasers, who paid an average of $ 1,205.00 per square foot (Brick Underground). This price differential is mainly due to the fact that Cooperative units tend to be located in older buildings and, therefore, lack the new, luxurious amenities that Condominiums have to offer. Furthermore, developers of Condominiums are capable of demanding higher sales prices, as many new Condominiums have secured property tax abatements. Lastly, property taxes are calculated differently in Cooperatives as opposed to Condominiums. Cooperative real estates taxes are almost always lower than Condominiums’ because the building is assessed as a whole instead of as individual units. Put succinctly, Condominiums generally differ from Cooperatives in terms of the lifestyle being offered, but, at the same time, are more of a financial burden.
New Development Condominiums in NYC: Special Risks
Most Condominiums, especially in NYC, are new developments. There are special risks when purchasing a Condominium that is a new development, as what the sponsor guarantees is not necessarily what the Purchaser receives. See the Section of this Website that deals with the Acquisition in a New Condominium Development. Briefly, with New Condominium Developments it may be complicated to determine the exact amount of property taxes to be collected. The amount is subject to change as the project unfolds. Not only are property taxes unpredictable in developing Condominiums, but there may also be many hidden costs that Purchasers need to be aware of. Sponsors, for instance, may include a certain brand appliance but Purchasers want a different brand. However, for the Purchasers’ appliance preference to be installed, an upgrade cost may be demanded. One last note regarding new developing Condominiums is that the closing date is highly questionable because there are frequent, unforeseeable delays in construction. Normally, clauses in the Contract of Sale or the Offering Plan provide for closing delays and the rights of the parties should a delay occur.