Building types in Brooklyn
Sponsor co-op units in Brooklyn
Brooklyn sponsor units come out of brownstone-belt and shorefront conversions, and in a small corporation the sponsor’s position can dominate the building.
What is different about buying a sponsor co-op unit in Brooklyn?
Quick Answer
Brooklyn sponsor units come out of brownstone-belt and shorefront conversions, and many of the corporations are small. In a building of a dozen units a sponsor holding several of them controls the votes, the budget and the pace of repairs, which matters more than the board exemption a purchaser is buying.
Which co-op buildings of this kind are actually in Brooklyn?
- Unsold shares in small brownstone corporations in Park Slope, Clinton Hill and Prospect Heights
- Blocks of units in larger shorefront and Eastern Parkway conversions from the 1980s
- Positions bought by successor investors rather than held by the original sponsor
- Units delivered with rent-stabilized tenants in occupancy since before the conversion
What do board approval and financing look like in Brooklyn?
- The offering plan generally exempts a sponsor sale of unsold shares from board approval, which is the main reason purchasers seek these units
- In a small corporation, a sponsor with several units controls a bloc of votes and can decide whether the building funds a repair
- Lenders read the sponsor percentage as a rental percentage, and in a twelve-unit building three sponsor units is a quarter of the corporation
- The recognition agreement and the co-op lien search apply as they would on any share loan
Which taxes and recording steps apply in Brooklyn?
- No mortgage recording tax and no recorded purchase instrument, the same as any co-op
- Brooklyn sponsor plans frequently shift the state and city transfer taxes to the purchaser, and that shift also raises taxable consideration
- The mansion tax is reached on a smaller share of Brooklyn sponsor sales than Manhattan sponsor sales, but the shifted transfer tax can move a borderline deal across it
- Judgment and lien searches run against Kings County records and against the sponsor entity
What pattern does a purchaser meet in Brooklyn?
- Sponsor arrears in a small Brooklyn corporation are a direct budget problem, and the financial statements show it before any search would
- A sponsor who has not funded reserves leaves the incoming shareholder facing the assessment for work that was deferred for years
- Landmarked districts add Landmarks review to facade and window work a sponsor-controlled board has deferred
- Units delivered in original condition need an alteration agreement from a board the purchaser bypassed at purchase
What does a large sponsor holding do to a small Brooklyn co-op?
It concentrates control. A sponsor holding a quarter of a twelve-unit corporation votes a quarter of the shares, influences who sits on the board, and has an interest in keeping maintenance low rather than funding reserves. The consequence reaches the incoming shareholder as a deferred repair and a later assessment.
Does the transfer-tax shift apply in Brooklyn sponsor sales?
Frequently, yes. It is a term of the offering plan rather than a borough rule, and Brooklyn plans commonly place the state and city transfer taxes on the purchaser. Because the payment counts toward consideration, it can also push a deal over a mansion tax threshold it would otherwise sit below.
What else should you read before closing on one of these?
In the glossary
- 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...
- 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...
- Assessment (co-op or condo)A charge levied by a co-op or condominium board beyond ordinary maintenance or common charges, typically to pay for a capital project. It is disclo...
- 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...
- Maintenance (co-op)The monthly charge a co-op levies on each shareholder, covering building operations plus that shareholder's share of real estate taxes and the unde...
Questions this raises
- What is a sponsor unit in a co-op?A sponsor unit is an unsold apartment still held by the converter. How the offering plan changes board approval, transfer taxes and the condition o...
- Who pays transfer tax on a sponsor sale?Sponsor sales usually shift the state and city transfer taxes to the purchaser, and the amount is grossed up. How the offering plan controls the al...
- Who pays a co-op or condo assessment at closing?A NYC co-op or condo assessment is allocated by the contract of sale, not by custom. How installments and lump sums get split between seller and pu...
Building types
- Sponsor co-op unitAn unsold share allocation still held by the building’s original sponsor, sold under the offering plan rather than through the ordinary board process.
- 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...
- HDFC co-opAn affordable cooperative formed under Article XI of the Private Housing Finance Law, with an income cap on purchasers and a flip tax that runs to ...
This building type, borough by borough
- Sponsor co-op units in ManhattanManhattan’s 1980s conversion wave left sponsors holding unsold shares, and buying one means no board approval but a different tax and occupancy pic...
- Sponsor co-op units in QueensQueens garden co-op conversions left some of the largest remaining sponsor holdings in the city, and in several complexes the sponsor is still the ...
- Sponsor co-op units in the BronxBronx sponsor units sit mostly in Riverdale and Grand Concourse conversions, where the sponsor’s reserve funding record predicts the assessments a ...
- Standard co-ops in BrooklynBrooklyn co-ops split into two very different populations: small self-managed brownstone corporations, and the very large post-war complexes along ...
- Sponsor resale condo units in BrooklynBrooklyn sponsor units frequently sit in small buildings where the sponsor still controls the board, the budget and the pace of the punch list.
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