Closing questions
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 mortgage.
What is the difference between common charges and maintenance?
Quick Answer
The two figures are not comparable on their face, and comparing them directly is the most common budgeting error in a co-op versus condo decision. Maintenance in a cooperative includes the shareholder’s proportionate share of the building’s real estate taxes and the debt service on the building’s underlying mortgage. Common charges include neither.
To compare honestly, add the condominium unit’s own property tax bill to its common charges, then set that total against the cooperative’s maintenance. Only then are the two numbers describing the same thing. Any abatement the unit qualifies for belongs in the comparison as well, because abatements differ by ownership type and by use.
The tax portion of maintenance is what makes part of it deductible to a shareholder, subject to the rules that apply to that taxpayer. The corporation reports the deductible fraction annually. That is a matter for the purchaser’s accountant, and the fraction changes year to year with the building’s taxes and debt service.
An underlying mortgage has no counterpart in a condominium. A cooperative can borrow against the building, and that debt is serviced out of maintenance, so its size and maturity belong in the diligence. A refinancing that lands during the holding period can move maintenance more than any operating expense will.
Why is co-op maintenance usually higher than condo common charges?
Because it is paying for more. Maintenance carries operations, the building’s real estate taxes and the debt service on the underlying mortgage, while common charges cover operations alone. A condominium owner pays the tax bill separately, so the total outlay can be similar even though the monthly line the listing quotes is smaller.
Can common charges or maintenance become a lien on the unit?
In a condominium, unpaid common charges become a lien on the unit under the Real Property Law, and the board can file and foreclose it. In a cooperative, unpaid maintenance is secured by the corporation’s lien on the shares, which generally sits ahead of the shareholder’s lender. Both surface in the searches.
What else should you read before closing?
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 ...
- 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...
- 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...
- LienA claim against property securing payment of a debt. Liens rank by priority, and closing normally means paying or releasing every one ahead of the ...
- 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...
Questions this raises
- Can a condo board block a sale in New York?A condo board holds a right of first refusal, not an approval right, so it rarely stops a sale. What it can do is delay one by withholding the waiver.
- How long does a condo right of first refusal waiver take?Condo waiver letters usually issue two to four weeks after a complete application. What actually delays them, and how to keep the closing date intact.
- Can you do a CEMA on a condo refinance?A condo refinance can use a CEMA because the loan is a recorded mortgage. How the assignment works, what it saves, and which lenders decline to coo...
- 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...
- Does a condop close as a co-op or as a condo?A condop apartment closes as a co-op share transfer even though the building is divided into condominium units. What that hybrid changes at the clo...
- Do co-ops have title insurance?A NYC co-op purchase transfers shares, not real property, so no owner’s policy issues. What the lien search and UCC search do in place of a title p...
Building types
- Standard condoA New York City condominium unit: real property conveyed by deed, recorded in ACRIS, with an undivided interest in the common elements.
- Standard co-opThe ordinary New York City cooperative: you buy shares in a corporation and receive a proprietary lease to occupy a specific apartment.
- Condo in a converted buildingA condominium created by converting an existing rental building, where non-purchasing tenants, the reserve fund and building-wide conditions carry ...
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