Property types

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Property Types in NYC

Cooperatives. Although this is not a contemporary concept, cooperatives is a very common type of ownership in New York City, more than elsewhere in the United States. The large supply of cooperatives mean that there is more inventory to choose from (if the buyer includes co-ops into the mix of properties), and that prices will tend to be more attractive.
Cooperatives are owned by an apartment corporation. Individual tenants do not actually "own" their apartments as they would in the case of "real" property. Owners, (shareholders) of co-op apartments, actually own "shares" in the corporation which entitles them to a long-term "proprietary lease." The corporation pays the total amount of the building's mortgage (importantly, a cooperative may have an underlying mortgage on the entire building, whereas a condominium building must be owned outright), real estate taxes, employee salaries, and other expenses for the upkeep of the building. The tenant-owner, in turn, pays a portion of these expenses as determined by the number of shares the tenant owns in the corporation. Share amounts are dictated by apartment size and floor level.

When buying a cooperative, the buyer should take into consideration that (a) the Board of Directors elected by all of the tenant-owners of the co-op, has the right to "approve" or "reject" any potential owner. The board has the responsibility of protecting the interests of all tenant-owners by selecting well-qualified candidates; (b) the quality of services and the security of the building are kept at high standards; (c) although tax structures vary, part of the monthly maintenance are tax deductible. Shareholders can deduct their portion of the building's real estate taxes, as well as their proportionate share of the interest on the building's mortgage; (d) some of the cooperatives request substantial down payments. Purchasers should be prepared to pay at least 20% of the purchase price. (e) if the buyer wants to sublease his apartment, the Board of Directors must approve it. In general, each corporation has its own rules, and they should be examined if a potential owner intends to sublet.

Condominium. This is a new concept in NYC, brought over from other parts of the country. A condominium apartment in NYC means real property. The buyer gets a deed just as if he were buying a house, with a separate tax lot for each apartment. It means that the buyer pays his own real estate taxes for the property and also common charges on monthly basis. Common charges are similar to maintenance in a cooperative. However, they will not include real estate taxes since these are paid separately, nor will they include the building's mortgage and interest given that a condominium, by law, cannot have an underlying mortgage.
Condominiums are attractive for a variety of reasons: (a) financing the purchase of a condominium apartment is governed by the financial markets not a board of directors and thereby much more flexible than in a cooperative. Generally, a buyer can finance up to 90% of the purchase price; (b) an approval process is usually required, and most condo boards are requiring application packages with financial disclosure. However, the requirements are not as rigorous as the co-op boards. A board meeting may or may not be required. The length of time for approval varies from building to building, but it is usually not as long as a co-op approval process (c) there is greater flexibility in sub-leasing your apartment, which makes condominiums the better choice for investment property; (d) they are the ideal choice for non-U.S. citizens or for those with their assets held outside of the United States given that co-ops are unlikely to approve a buyer whose funds are not in the U.S.
Given that there are fewer condominiums than cooperatives and that they are "easier" to purchase, they are generally more expensive than co-ops. Additionally, monthly combined common charges and real estate taxes in a condo are typically less than a co-op's monthly maintenance charges, again resulting in higher purchase prices.

Cond-Op. When a residential condominium is owned by a cooperative corporation, it is a cond-op. It occurs when the ground floor is converted into a separate condominium. Such a condominium can be owned by the building sponsor or by someone who is not part of the building. It is an appealing ownership structure when a co-op does not want to involve itself in the complexity of managing other segments, such as the parking garage and commercial retail. Real estate brokers sometimes refer to a co-op that does not require or restrict board approval for rental as a cond-op.
Although the definition of the residential units is in fact a coop, the separate ground floor are a condominium owned by an entity other than the coop. In this case the coop does not receive the benefit of the income from these units.

Townhouse. Townhouse means any building containing multiple dwelling units with ownership of each unit conveyed by a deed of real property which includes the land upon which the dwelling is constructed. Townhouses can often make an excellent "middle ground" between a detached single family home and a full fledged condominium because, to some degree, they offer attributes of both. Townhouses can range from duplexes and triplexes all the way through huge townhouse communities consisting of hundreds of similar homes. There is a good degree of variance in the way townhouse communities are structured. It may be a simple agreement (as is often the case of duplexes and triplexes) that each parcel of land and the home that sits on it is separately owned. In the case of larger townhouse communities, you will generally have an additional shared ownership in the common areas of the complex as well as any amenities such as swimming pools, park areas, etc. The owner is responsible for payment of all real estate taxes, maintenance and repairs of the property. The property may be conveyed to any party without prior approval by anyone other than the homeowner.