Because real estate is so scarce in Queens and the other boroughs of New York City, would-be buyers will have to get creative when exploring their options.
One option buyers might consider is purchasing a co-op apartment. A co-op apartment is organized a bit differently than other condominiums or neighborhood associations.
The buyer will actually not receive a deed at closing. Instead, the owner will hold shares of stock in the corporation that owns the complex. The shares are specifically allocated to the owner’s apartment.
In practice, one big difference with buying a co-op is that the organization’s board of directors will usually have the right to decide whether to allow the transfer of stock.
A potential buyer is going to have to convince the board that the buyer will meet the board’s requirements. After approval, buyers should remember that, much like a landlord, the board also has the power to establish rules and requirements for the complex.
Purchasing a co-op requires diligence in order to avoid waste, legal troubles
In addition to getting the board’s approval, a buyer should also review the corporation’s minutes and other public records to be sure that the buyer feels comfortable doing business with the corporation.
The buyer will also want to be sure to review the rules of the co-op, as they may include items like costs and fees, restrictions on pet ownership, or the ability to make changes to the interior of the apartment. As one example, most co-op organizations will charge a transfer fee called a flip tax whenever an apartment changes hands.
The purchasers will also need to think about more common real estate issues, such as having a clean title and arranging for financing.
It takes some time, effort, and know-how to purchase a co-op apartment. However, investing this time upfront can save the buyer a lot of time and troublein the long term, including trouble related to legal issues.