Building types
Mitchell-Lama co-op
A limited-equity cooperative in the State and City Mitchell-Lama program, sold from a waiting list at a formula price rather than on the open market.
How does a Mitchell-Lama co-op sale work?
Quick Answer
What is the property interest, legally?
- The development is supervised by HPD or by New York State Homes and Community Renewal
- Equity is limited by the program, so the resale price follows a formula, not a market negotiation
- Units go to the next qualified household on the development’s waiting list
- Succession rights let a qualified family member take over the unit under stated conditions
- A development can vote to leave the program, which is what the buyout question is about
How is a purchase of this type financed?
- Purchase prices are low enough that many transfers involve little or no institutional financing
- Lenders that do participate underwrite the supervising agency’s rules alongside the borrower
- Program limits, not lender limits, usually set what a purchaser may pay
- A privatization vote changes the financing picture entirely and is disclosed when pending
Which taxes and building fees apply?
- Transfer taxes apply to the share transfer as they do on any co-op
- The formula price is usually well below the mansion tax threshold
- A surcharge applies to shareholders whose income exceeds the program limits
- No mortgage recording tax on a co-op loan
What does the approval path look like?
- Apply to the development and reach the front of its waiting list, or qualify by succession
- Income and household composition verified by the development and the supervising agency
- Corporation issues the shares and the proprietary lease at the formula price
- Supervising agency approval where the program requires it
- Closing scheduled once the agency and the corporation have both signed off
Can a Mitchell-Lama unit be sold on the open market?
Not while the development remains in the program. The corporation buys the shares back at a formula price and reissues them to the next qualified household on the waiting list. That is the defining feature of limited-equity housing and it is why these units are priced the way they are.
What is a Mitchell-Lama buyout?
A development that has satisfied its mortgage obligations may vote to leave the program and become a market-rate cooperative. Privatization changes resale value, maintenance and taxes for every shareholder, which is why a pending vote is material to anyone considering a transfer.
Who can inherit a Mitchell-Lama apartment?
Succession is available to family members who meet the program’s co-occupancy and income requirements and who were listed on the annual income affidavits. The requirements are specific and documentary, and a succession claim that was never supported by the affidavits is the common failure.
What else should you read before closing?
In the glossary
- Co-op lien searchThe search performed on a co-op purchase covering UCC filings, judgments, liens and unpaid building charges tied to the shares and to the selling s...
- 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...
- Flip taxA transfer fee charged by a co-op or, less often, a condominium when a unit changes hands. It is a creature of the building's governing documents, ...
- 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
Building types
- HDFC co-opAn affordable cooperative formed under Article XI of the Private Housing Finance Law, with income caps on purchasers and usually a restricted resal...
- Standard co-opThe ordinary New York City cooperative: you buy shares in a corporation and receive a proprietary lease to occupy a specific apartment.
- Land-lease co-opA cooperative that owns its building but leases the ground beneath it from a separate landowner, on a lease with a reset schedule and an expiry date.
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