FREQUENTLY ASKED QUESTIONS ABOUT CO-OPS

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What is a co-op?
Is there an approval process?
What should I expect my attorney to do for me?
What should I expect as closing costs?
How much do you charge?

What is a co-op?

A co-op is an apartment whose ownership ("title") is represented indirectly by the ownership of shares in a cooperative housing corporation known as the "co-op corporation." The co-op corporation owns the actual real estate property. The ownership of the shares entitles the shareholder to the exclusive occupancy of such apartment under a lease with the co-op corporation called a "proprietary lease." The co-op corporation will collect a monthly "maintenance" charge. The maintenance includes your portion of the costs of the upkeep, fuel and labor to operate your building. It also includes your share of the building's real estate taxes and the debt service on the building's mortgage.

Is there an approval process?

In most cases the co-op corporation has the right to accept or reject the transaction for valid (usually financial) reasons. The co-op corporation will require a package of financial disclosure which is prepared by you, under the guidance of your real estate salesperson. Additionally, most co-op corporations restrict the subletting of a co-op proprietary lease to some degree.

What should I expect my attorney to do for me?

If you are selling your co-op, I will assemble all of the appropriate information necessary to draft your contract of sale. I will arrange for the payoff of your co-op loan and the appearance of your lender's attorney at the closing.

If you are purchasing a co-op, I will thoroughly investigate and advise you of the finances, potential repairs, improvements and the policies of the co-op corporation before a contract of sale is executed. You can expect that if I am permitted, I will personally visit the offices of the co-op corporation's managing agent to examine their records. I will negotiate your contract of sale with the seller's attorney.

For buyers and seller, I will coordinate the timing of the closing, which will occur at the offices of either the co-op corporation's management firm, or its attorney. During the closing, I will explain the dozens of documents you will have to sign, including transfer documents, tax forms, and, if you are financing your co-op purchase, your lender's loan documents. After the closing, I will provide you with a comprehensive closing statement of the transaction.

What should I expect as closing costs?

Your closing costs will vary, depending on whether you are buying or selling a co-op. For a printable chart of estimated closing costs, click here.

If you are buying your co-op, you will be responsible for the following:

• Lender costs, which will vary depending on the lender and the particular "products" your lender offers. Your lender is required to give you a "good faith estimate" after you submit your application

• The New York State "Mansion Tax" is one percent of the purchase price imposed on purchasers of residential properties whose purchase price exceeds one million dollars.

• Co-op corporation/management costs, which include the following fees:

  • application review and credit check - typically $300 - $500,

  • financing fee of $150 - $500,

  • a possible lien filing fee of $100 - $250,

  • a move-in fee and a move-in deposit of $250 - $500 each,

  • a reimbursement to the seller of the maintenance pro-rated from the date of closing to the end of the month, and

  • if your closing is after the 20th day of the month, the next month's maintenance payment.

If you are selling your co-op, you will be responsible for the following:

• The New York City Real Property Transfer Tax is one percent of a sale price below $500,000 and 1.425 percent of a sale price above $500,000 plus a $50 filing fee.

• The New York State Real Estate Transfer Tax is $2 per each $500 or portion therefore of sales price.

• Sellers who are not New York State residents must pay estimated New York income tax of 6.85 percent of your net profit.

• Co-op corporation management costs, which will include the following fees:

  • administrative/legal fee of $300 - $1000,

  • a move-out fee and a move out-deposit of $250 - $500 each,

  • any outstanding charges that you may owe the co-op corporation,

  • a legal fee to your lender to appear at closing for the payoff of their loan of $250 - $500, and

  • a recording fee for terminating your lender's lien on the co-op apartment of $75 - $125.

There may be other costs associated with your transaction, so it is important that you make me aware of all the terms of your particular transaction.

How much do you charge?

For transactions below $750,000, my fee ranges from $1,750 to $1,900.

For transactions between $750,000 and $1,000,000, my fee ranges from $1,900 to $2,500.

For transactions between $1,000,000 and $1,500,000, my fee ranges from $2,500 to $3,000.

For transactions above $1,500,000, my fee is dependant on the nature of the transaction and the time expended.

For loan/mortgage re-financing, my fee is $800.

The range of fees referred to above are determined during my initial consultation. During the course of your matter, I may determine that certain circumstances exist which may increase the amount of time required for your matter. In that event, my fee may be higher. Any such excess will be billed at my usual rate of $450/hour.

Fifty percent of the anticipated fee is due and payable upon retaining my services, with the balance due at closing. The initial fifty percent retainer may or may not be refundable, depending on the amount of work done prior to an early termination of the transaction, but I will do my best not to waste your money if I believe that any work is premature.

Fred E. Rosenberg, Esq.

Telephone: 212-939-7287    FAX: 212-531-6134

Postal address: 57 West 38th Street - 9th floor - New York, NY 10018

Click here to send an email to Fred E. Rosenberg, Esq.

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