Building types
Sponsor co-op unit
An unsold share allocation still held by the building’s original sponsor, sold under the offering plan rather than through the ordinary board process.
What changes when you buy a sponsor co-op unit?
Quick Answer
What is the property interest, legally?
- The shares were never sold at conversion and remain unsold shares under the offering plan
- The offering plan and its amendments, not the ordinary house practice, control the sale terms
- Board approval is generally not required, though notice to the board usually is
- Unsold-share status can carry rights the ordinary shareholder does not have, including sublet freedom
- The status is not permanent, and it can be lost when the shares change hands
How is a purchase of this type financed?
- Financing is a normal co-op loan secured by a UCC filing and a recognition agreement
- Some lenders limit financing where a single holder still owns a large share of the building
- A high sponsor concentration is a building-level underwriting question, not a borrower one
- Unsold-share sublet rights can help a purchaser who intends to rent, subject to lender rules
Which taxes and building fees apply?
- NYS transfer tax and NYC RPTT apply, and the offering plan frequently makes the purchaser pay them
- Paying the seller’s transfer tax increases the purchaser’s taxable consideration
- The mansion tax applies at the statutory threshold and is a purchaser obligation in any case
- No mortgage recording tax on a co-op loan
What does the approval path look like?
- Obtain the offering plan and every amendment, and read the sponsor sale terms
- Confirm in writing which closing costs the sponsor is shifting to the purchaser
- Confirm whether the board requires notice, a waiver, or nothing
- Lien search and UCC search ordered as on any co-op
- Closing scheduled once the lender and the corporation are both satisfied
Do you skip the board interview on a sponsor unit?
Usually yes. Because the shares are unsold shares under the offering plan, the sponsor may sell without board approval, so there is generally no package and no interview. Most buildings still require notice to the board, and a few impose conditions, so the plan and the bylaws get read.
Who pays transfer taxes on a sponsor sale?
The statute puts the transfer tax on the grantor, but sponsor contracts routinely shift it to the purchaser, along with the sponsor’s attorney fee. Because the tax the purchaser pays on the seller’s behalf is itself treated as consideration, the total is higher than the headline number.
What are unsold shares worth to a buyer?
Unsold-share status can carry broader sublet and resale rights than an ordinary shareholder has, which matters to a purchaser who wants flexibility. Whether that status passes to a purchaser depends on the offering plan and the proprietary lease, so it is confirmed rather than assumed.
What else should you read before closing?
In the glossary
- 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, ...
- 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...
- Mansion taxA New York State tax paid by the buyer on residential conveyances of one million dollars or more, graduated upward through a series of higher price...
- UCC searchA search of UCC filings for security interests in personal property, run against the seller and, on entity deals, against the entity itself.
Questions this raises
- What documents do I sign at closing?Note, mortgage, title affidavit, settlement statement and transfer tax returns for buyers; deed and releases for sellers. What each document actual...
- What do I need to bring to a closing in NYC?Photo ID, funds in the form the agent instructed, a checkbook for adjustments, and every signer. The New York City closing checklist for buyers and...
Building types
- Standard co-opThe ordinary New York City cooperative: you buy shares in a corporation and receive a proprietary lease to occupy a specific apartment.
- 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...
- 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.
- CondopA building split into two condominium units, one commercial and one residential, where the residential unit is owned by a cooperative corporation.
The statute itself
Have a closing coming up?
Tell us about the transaction. An attorney reads every intake form and responds the same business day.
Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.