Choosing a property in New York City can be complex. The city’s residential market includes distinct types of properties whose unique characteristics can affect your ultimate decision. You want to make sure you are aware of these differences prior to house hunting.

C O N D O M I N I U M S

Condominiums are considered “real property” under New York City law meaning the purchaser owns the actual property, as opposed to purchasing a share in a co-op. Owning real property means owners have tremendous flexibility over their living space in regard to sub-letting and renovating.

Compared to other property types, a condo is relatively straightforward to purchase. There are no interviews required and condos typically allow for up to 90% financing. Once a contract is signed, a transaction can be closed within 1 to 2 months. Buyers receive a deed as they would when purchasing a townhouse. Condo owners pay monthly charges based on their units’ square footage however these are separate from property taxes which are directly paid to the city.

Condominiums are popular among investors and home owners looking for flexibility and freedom. With fewer policies and regulations in place, they’re a fantastic option for anyone seeking to renovate a unit, sub-let, or who finds the board approval process undesirable.

C O - O Ps

Co-op is short for housing cooperative; under New York City law,  this type of residence is considered personal property rather than “real property.” Although the units are very real indeed, a co-op building is owned by a larger corporation. This corporation splits the building into shares based on the size per apartment which in turn is reflected in the price per unit. When you “purchase your Co-op” you’re in essence solely purchasing shares. The apartment is still owned by the corporation, however you are granted the right to live in that share through a “proprietary lease.”

The elected group of current co-op owners for each cooperative building is known as ‘the board.’ The board aggregately makes all financial and management decisions for the building, including which prospective purchasers get to live in the building. To purchase a co-op share, prospective purchasers must submit a board package. The board package includes financial statements and recommendation letters for each applicant up for review by the board. Once a board package is accepted, the next step is for the prospective purchaser to be interviewed by the board. If approved, the purchaser proceeds to the closing tables and is then granted a proprietary lease. Residents pay monthly maintenance fees that contribute to the building’s expenses reflective of the amount of share they own. Minimum down payment starts at 20% for co-ops and transactions are expected to close 3-4 months after contract signing.

Co-ops are relatively less expensive than other property types, and are thus ideal for individuals seeking the most space for their dollar. They’re also the most popular property type in New York City; nearly 70% of inventory in the city are co-ops. The trade-off for a great bargain is the lack of flexibility for shareholders. Any major changes you wish to perform including renovations or sub-letting must first be approved by the board beforehand. Boards are not legally required to accept any proposition you present and have the right to keep their reasoning confidential. Certain co-ops have stern regulations; you’ll want to make sure you ask your EZ NYC representative about all these rules prior to applying.

C O N D – O P

This is a rare yet available alternative to a condo or co-op. Cond-op units are located in buildings that have been divided into different sectors which can serve as commercial, condominium and Co-op structures. Cond-ops are also known as mixed-use buildings.

Typically, most of the building will govern as a condominium however a section of units may be under jurisdiction of a co-op (a corporation owning the units). Thus, you would proceed to purchase shares for a unit such as you would when buying a co-op however the regulations of the building are more like those of a condominium. Prospective cond-op purchasers can buy shares for a unit however they do not need to worry about being approved by a co-op board, nor do they have to abide by the strict regulations that are commonly associated with co-ops.

L A N D – L E A S E

Land-lease buildings sit upon land that the building does not own. The building is leasing the land it has been built on. This is an uncommon practice for developers however it does exist. One of New York City’s neighborhoods, Battery Park City is infamous for its 90% composition of land-lease buildings.

The prices for units in these types of buildings can be misleading. They appear to be inexpensive relative to all other New York City residential inventory however the ownership of a unit is not secure and monthly charges can be high. This is due to the fact that leases must eventually be renegotiated and are not permanent. If the lease is renegotiated, the lease price for the building will surely rise and this will reflect upon the owner’s common charges. These monthly charges are not tax deductible. If the lease is not renegotiated, the Co-op/Condo will be evicted.

If you do choose to purchase a land-lease unit, keep in mind the duration of the lease relative to the time you are purchasing. A 99-year lease may sound great as you will not have to deal with incurring the likely appreciated monthly charges, however if you wish to sell the unit in 50 years, then you must find someone who is willing to take that risk.

Land lease building units tend to ward many consumers however if you decide to purchase such a unit, we recommend a real estate attorney on hand.

S P O N S O R   U N I T

A sponsor is the entity responsible for either developing a building, or converting a rental building into a cooperative or condominium. A sponsor unit owned by this entity whose responsibility is to sell the unit as a co-op or Condo. Thus, the initial purchaser of the unit will be the first true sole owner or shareholder of the unit.

These types of units are ideal for candidates that might likely be turned down by a co-op board as there is almost always no co-op board approval process needed. This leniency is perfect for parents (purchasing property for their children) or prospective purchasers with short work history or poor credit history.

T O W N H O U S E S

Townhouses, brownstones, and multi-families are a great investment in any New York City neighborhood. The market tends to favor these residences in regards to appreciation.

These developments are unique in that they have sufficient space to create multi-family units within the building and may include assets such as a backyard that are not common to other residential properties.

Townhouse owners have the advantage of being able to live in a lower level within the building whilst renting out upper level units. Town houses are a favorite among investors because they can yield rental income from multiple units, or turn the building into one grand house.