In New York City, there are numerous cooperative housing buildings. Co-ops are different from condominiums and single-family homes. What are the differences between them? A buyer should know the differences before buying an apartment.
The owner is responsible for the house and the property when you own a single family home. When you buy a condo, you are responsible for everything inside the apartment and you pay condo fees to maintain the overall property.
When buying a co-op, the board must approve you and once approved, you can buy the apartment. Remember, that the cooperative owns the building and you own shares in the corporation. Every month, each owner pays a maintenance fee to the corporation to pay the building mortgage, property taxes, professional property management firm, and the maintenance charges. Each co-op has its own set of bylaws. The bylaws state the dos and don’ts of the building and they can vary building to building. At times, the bylaws can seem too restrictive and might not work for everyone.
If you decide that you want to live in a co-op, then find a real estate agent who has co-op experience. The agent can help you navigate the financing and board approval. The approval process is the toughest part of buying a co-op. Build a team with an accountant and an attorney that will help make the process as smooth as possible.
Now that you found the apartment, it is time to read the co-op’s bylaws and financials. Make sure that the bylaws are ones that you can abide by and that the financials are in the black. Check that the co-op has a sufficient reserve for unexpected repairs and expenses. If there is not enough money, then you may be required to pay more in maintenance fees.
Once you determine the building is financially healthy, the board will want proof that you are financially healthy and can pay your maintenance.
After confirming that the building is financially healthy, the board will want proof that you are financially healthy and can afford to pay your monthly maintenance fees. The board could ask for your tax returns, pay stubs, credit reports and more. They ask for all these things because the board needs to make sure that you can pay your maintenance to keep the building financially secure.
A potential buyer needs to meet with the board because they must approve you financially and personally. A board cannot discriminate but they do not have to give a reason for them rejecting you. Due to this reason, the approval process can be stressful since the board has the last say in whether you can buy your apartment. However, do not let this deter you because you could be one of the lucky ones and get your application quickly approved.