What is a Co-op?

In New York City, 85% of all apartments available for purchase

(and almost 100% of pre-war apartments) are in co-operative buildings.

When you buy a co-op, you don't actually own your apartment.

Instead, you own shares of a co-op corporation that owns the building.

The larger your apartment, the more shares within the corporation you own.

Monthly maintenance fees cover building expenses

including heat, hot water, insurance, staff salaries, and real estate taxes

Advantages of Buying a Co-op

Co-ops are generally less expensive than comparable condominium apartments.

Some of your monthly maintenance fees are tax deductible.

Disadvantages of Buying a Co-op

All prospective purchasers must be approved by the Board of Directors.

The Board approval process is often time-consuming and rigorous --

requiring extensive information regarding finances, employment,

and personal background.

Even celebrities have been turned down by some selective New York co-op boards.

Monthly maintenance fees for co-ops are much higher than for condos.

This is because the monthly fee includes part of the underlying mortgage for the building.

Many co-op boards limit the amount of the purchase price that

can be financed and require higher down payments

than are usually required for condominiums.

It is harder to sub-lease a co-op. Each co-op building

has its own rules, but many limit or forbid subletting.

What is a Condominium?

Condominiums are becoming more popular in New York City

as new residential buildings are constructed. Unlike co-ops,

condo apartments are "real" properties.

Buying a condo is much like buying a house

Each individual unit has its own deed and its own tax bill.

Condos offer greater flexibility, but are often priced

 higher than comparable co-op apartments.

Advantages of Buying a Condo

In most cases, buyers can finance a larger portion of

the purchase price (up to 90%) and put less money down.

With a condominium, you don’t have to deal with board approval.

Condo apartments can be freely sublet, giving you more flexibility.

Monthly maintenance fees for condos are much lower than for co-ops.

Disadvantages of Buying a Condo

Condos are generally more expensive than comparable co-op apartments.

Monthly maintenance payments are not tax-deductible.

There are fewer condos available in the New York City real estate market, which limits your options.

Maintenance Fees

Avoiding Unpopular Increases

Cost of living increases can be felt everywhere, from the theatre to the supermarket to the gas station. So it may come as a surprise to many co-op and condo residents that one place you don't have to expect an increase is in your monthly maintenance bill. The building can avoid unpopular increases by lowering the operational costs, refinancing the mortgage or increasing property revenue. Instituting one or more of these strategies in your building can result in stable maintenance payments that will make residents happy and cause buyers to smile, too.

Slashing Operating Costs

One way to diminish building costs is by eliminating unnecessary staffing. "If your elevators are manually operated, modernize them by removing the elevator men," recommends Marcia Taranto, president of Taranto & Associates Inc., a property management company in Manhattan. "And, if a staffer is talented in some area, hire him to do some jobs on his own time if he desires. Use employees instead of outside contractors to do minor plumbing, painting or repairs.Supplies "With smaller amounts, management has a better idea of how much is actually needed by properties.Don't buy anything without a purchase order. Start by reviewing bills if they seem high, and to keep in mind that some suppliers offer a one percent discount if you pay within 30 days.

 Reviewing Management Performance

Property management is a service industry, and some service providers perform better than others. To evaluate how your property's management measures up, it's necessary to assess both how the company functions as a whole and also how your individual managing agent is performing. To do that, it's important first to understand what professional management is supposed to do, and then to have a clear picture of what really good management looks like. 

You should expect maintenance of accurate, accessible files and records for your property .The firm should provide knowledgeable interaction with your property's other professionals such as legal counsel, accountant, engineer and architect in addition to effective responses to resident inquiries and concerns. Many management companies,on their standard management fee or at cost above that, also offer ancillary services such as transfer and closing services, sales and brokerage, construction management, utility bill evaluation and refund application.

Board Resource Guide: Etiquette for Board Members

Conflicts & Confidentiality

Serving on the board of directors for your building brings on a range of emotions: pride that you were selected to represent the best interests of your fellow shareholders; unease at the thought of the additional time commitment of meetings; and, perhaps most importantly, nervousness that you will do or say something that will ultimately be problematic for your board or for you personally.

This article will discuss some of the more common legal and ethical pitfalls that board members might face and give advice on how to recognize and avoid falling into those traps.

Training of New Board Members

Experienced board members should help newer members learn the ropes, not only to protect the new guy, but also to protect the whole board collectively from errors that could cost them a court battle.

Unusual Insurance Claims

Developments and units can be insured, among other things, for fire, theft, natural disaster and water damage. Most boards' dealings with insurance companies, including its agents, brokers, claim examiners and underwriters, are routine and predictable.

"Water damage, kitchen fires, pipes breaking, those are the ones we see regularly,"  However, every once in awhile, a co-op board or condo association must be prepared to deal with out-of-the-ordinary claims that involve more than just the predictable insurance issues.

Frozen Pipes—Who's Responsible?

A unit owner dn't leave adequate heat on during the winter months. The pipes froze and burst, and the water ran for a long period of time because no one was checking on the apartment. When the burst pipe was discovered, his insurance company denied coverage because the unit owner failed to maintain adequate heat.

"The unit owner was a rather elderly attorney who didn't have much fight in him,"  "so his son, who was also an attorney, decided to take up dad's plight and pursue payment. The board of directors of the association did not want to put a claim in under their policy because they saw this as a problem created by, and isolated to, the unit owner."

With the association refusing to file a claim, repairs were not made. When the summer came around, mold started to form. In their best interest to get the moldy sheetrock and cabinets out of the unit so everyone wasn't affected."

The board decided to submit a claim under the association's policy, "but only with the idea that it should pay no more than what they should pay for [damage to] the common property," says Anderson. The owner, however, wanted the association to pay for everything.

"At the end of the day,"the association only took care of the common property. Heavy reliance was put on the master deed and bylaws. In this case, the master deed and bylaws were well written. They did a good job in defining what was common property and what was unit property."