Building types in Brooklyn
Investor condo purchases in Brooklyn
A Brooklyn investor purchase in a tax-benefit building can come with a rent-regulated tenancy attached, which is the borough’s distinctive trap.
What is different about an investor condo purchase in Brooklyn?
Quick Answer
Brooklyn holds most of the city’s newer condominium stock, and much of it was built under construction tax benefit programs. Those programs condition the benefit on rent regulation for units that are rented, so a Brooklyn investor purchase can come with a regulated tenancy attached to it.
Which condominiums of this kind are actually in Brooklyn?
- Newer buildings across Downtown Brooklyn, Gowanus, Williamsburg, Bedford-Stuyvesant and Sunset Park built under construction tax benefit programs
- Units bought to rent in buildings where other units are already investor owned
- Smaller buildings where a single investor holds several units
- Older converted stock without a tax benefit, where the rental rules are different
What changes about the waiver and the loan file in Brooklyn?
- Where the building holds a construction tax benefit, rented units can be subject to rent regulation for the benefit period, and the registered rent binds the owner
- A high investor share pushes the building past owner-occupancy thresholds and makes it non-warrantable for the next purchaser
- Lenders offer different products to entity purchasers than to individuals, and the loan search should start with that question
- The right of first refusal waiver still applies, and boards issue it to entity purchasers as they would to any other
Which taxes and recording steps apply in Brooklyn?
- Mortgage recording tax applies to the recorded mortgage, and the deed and mortgage record with the City Register through ACRIS
- The co-op and condo property tax abatement requires primary residence, so an investor-owned Brooklyn unit does not receive it
- The construction tax benefit on the building steps down on a schedule, and the carrying cost rises with it
- Where a limited liability company purchases, the transfer tax filings require the natural persons behind it to be named
What pattern does a purchaser meet in Brooklyn?
- Establish before contract whether the unit is subject to rent regulation under the building’s tax benefit, because that decides the achievable rent
- A registered rent history is a public record, and it is the document that settles the question rather than the seller’s description
- Where several units in a small building are investor owned, warrantability for the next purchaser is already compromised
- Short-term rental rules under city law bind the owner independently of what the condominium permits
Can a new Brooklyn condo unit be rent regulated?
Yes, where the building was built under a construction tax benefit that conditions the benefit on regulation of rented units. The condition runs for the benefit period, and it binds whoever owns the unit. An investor who has not checked can find the achievable rent is set by a registered figure rather than by the market.
How do you check a Brooklyn unit’s rent regulation status?
Through the registered rent history for the unit and the terms of the building’s tax benefit, both of which are matters of record rather than of the seller’s description. Where the building holds a benefit and the unit has been rented, the registration will show what has been charged and under what status.
What else should you read before closing on one of these?
In the glossary
- Common chargesThe recurring charge a condominium levies on each unit for building operations and reserves. Real estate taxes are billed to the unit directly and ...
- Transfer tax (RPTT and NYS)Taxes on the conveyance itself, one City and one State. Rates step up at higher prices, and who pays is set by custom and then confirmed by the con...
- ACRISNew York City's public index of recorded property documents for Manhattan, Brooklyn, Queens and the Bronx. Deeds, mortgages, satisfactions, easemen...
- Offering planThe sponsor's filed disclosure document for a co-op or condominium, carrying its budget, share or common interest allocation, building rules and sp...
- CovenantA recorded promise or restriction that runs with the land and binds future owners. Restrictive covenants limit what the property may be used for or...
Questions this raises
- What is a non-warrantable condo?A non-warrantable condo fails secondary market eligibility, so conventional financing is unavailable. What causes it and how buyers finance around it.
- What is the difference between common charges and maintenance?Condo common charges fund operations only, with taxes billed separately. Co-op maintenance bundles operations, property taxes and the underlying mo...
Building types
- Investor and pied-a-terre condo purchaseA condominium bought to rent out or to keep as a second home, where sublet policy, entity ownership and non-resident tax questions drive the struct...
- New-development condoA first sale from the sponsor of a newly built condominium, governed by an offering plan, often delivered on a temporary certificate of occupancy.
- Standard condoA New York City condominium unit: real property conveyed by deed, recorded in ACRIS, with an undivided interest in the common elements.
- Sponsor resale condo unitAn unsold condominium unit the sponsor still owns years after the building opened, sold under the original offering plan rather than as an ordinary...
This building type, borough by borough
- Investor condo purchases in ManhattanManhattan investor purchases raise entity ownership, non-resident seller withholding and the primary-residence condition on the property tax abatem...
- Investor condo purchases in QueensQueens has the deepest investor condominium market in the city, and the consequence is that the building itself is frequently unfinanceable.
- Investor condo purchases in the BronxA Bronx investor condominium purchase competes against small multifamily buildings, and the comparison decides whether the condominium structure is...
- Standard condos in BrooklynBrooklyn is where most of the city’s new condominium stock has been built, so tax abatements, first-year budgets and sponsor obligations dominate t...
- New development condos in BrooklynBrooklyn carries the largest new development pipeline outside Manhattan, and its buildings turn on tax benefit schedules, presale counts and first-...
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