If you are looking to buy an apartment in the greater New York area, your choices will typically include co-ops, condominiums and condops. Each of these property types can be an attractive solution for urban living, offering close proximity to work, schools and city amenities.

Co-ops, condo and condops each represent a different type of ownership structure, so there are a number of practical issues to consider before making an offer to buy a property. Once you have made a purchase, for example, you will be required to pay monthly dues and occasional special assessments to the building’s homeowner’s association. These dues and assessments cover the operation, repair and insurance for the building’s elevators, exterior structure and common spaces. The association plays a slightly different role in co-ops, condos and condops.

In the greater New York City area, the majority of apartments for sale, including those in most pre-war buildings, are co-ops. “Co-op” is simply an abbreviation for housing cooperative. A housing cooperative is a corporation that owns a residential building and issues shares of ownership to people who live in the building along with a long-term lease to occupy the apartment. Since co-ops are one of the most common ownership structures for apartments in New York, we will take a look at co-ops first, then compare other forms of apartment ownership you may encounter.

Co-ops

How it works

With a co-op, the corporation owns all units in the building. When you buy a co-op apartment, you buy a share of ownership in the housing cooperative (or “co-op”) that owns the building and you are assigned a designated amount of shares for a particular apartment along with a long-term lease known as the “Proprietary Lease.”

Advantages

Usually a lower purchase price than for a similar condo.

Disadvantages

You must gain approval from the co-op board before you can buy or sell any units in a building. Usually a higher monthly maintenance charge is due to the co-op association.

Additional considerations

Co-op boards are typically looking for the same financial criteria from potential homebuyers that most banks consider before originating a mortgage. In addition, many co-ops require higher down payments and cash reserves than a mortgage lender may require. Before making an offer on a co-op, be sure you understand the co-op board’s purchase requirements, as well as those of your lender. Co-ops usually have sublet restrictions.

Condos

How it works

With a condo you own, the apartment or “box in the sky”, which is considered real property. The common spaces, such as lobbies, public hallways and elevator banks are collectively owned by all condo unit owners.

Advantages

You can generally buy and sell units in the building without needing approval from the association. Usually a lower monthly common charge fee than the monthly maintenance charge of a co-op.

Disadvantages

Usually a higher purchase price than a similar co-op unit.

Additional considerations

You may find that it is easier to obtain a mortgage for a unit in an existing and fully occupied building rather than one that is newly constructed and/or unoccupied. Generally speaking, new-construction condominium buildings need to be at least 50-70% sold and owner-occupied before many lenders will consider offering a mortgage.

Condops

How it works

In NYC, condop is simply a marketing term given to a co-op that has rules and by-laws similar to that of a condominium.

Benefits of owning a condop

• More freedom to sublet your apartment
• Potential to make a lower down payments at closing
• Easier board approval for buying or selling a unit than a traditional co-op

Additional considerations

Closing costs may be similar to that of a co-op.

Single Family Homes

Single-family homes can be found in all five boroughs of New York City, although availability is often limited in the most desirable and centrally located neighborhoods. This low inventory can make the price of a single-family home prohibitively high for many New York City home buyers.

If you live in the New York City area and have a strong interest in buying a single-family home, you will most likely need to start your search in the outer boroughs or surrounding suburbs.

To learn more about buying a home, please visit us online or contact a mortgage representative today at + 1 212-338-0290 or 1 800-891-2471 extension 5250 or email mortgage@unfcu.com.

You may also attend our upcoming Mortgage Seminars to get in-depth information about Co-ops and Condos.