Closing questions
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 closing table.
Does a condop close as a co-op or as a condo?
Quick Answer
The structure exists because a building with substantial commercial income can create tax and financing problems for a pure cooperative. Carving the commercial space into its own condominium unit isolates that income, and the residential condominium unit is then owned by a cooperative corporation whose shareholders hold apartments in the ordinary way.
For the purchaser of an apartment, the transaction looks like a co-op purchase. Shares and a proprietary lease transfer, a UCC-1 secures the loan, no mortgage recording tax is due, and there is no owner’s title policy on the unit. The co-op lien search and UCC search do the diligence work.
What changes is the governance and the money. The condominium board and the declaration allocate expenses between the commercial and residential units, and disputes over that allocation, or a commercial unit that falls behind, reach the residential shareholders through the maintenance they pay. Read the declaration alongside the proprietary lease.
Some condops are marketed as being more permissive than a traditional cooperative, with easier sublet or pied-a-terre policies. That is a building-by-building fact set out in the house rules, not a feature of the structure. Verify it in the documents rather than accepting it as a general property of condops.
Is buying a condop apartment a co-op purchase or a condo purchase?
A co-op purchase, at the apartment level. The purchaser receives shares and a proprietary lease, the loan is secured by a UCC filing rather than a recorded mortgage, and board approval usually applies. The condominium layer sits above that, governing how the residential and commercial units divide the building’s expenses.
What extra documents should a condop buyer read?
The condominium declaration and bylaws in addition to the proprietary lease, the co-op bylaws and the house rules, plus the financial statements for the residential cooperative. The allocation of common expenses between the commercial and residential units is the term most likely to affect what an apartment costs to carry.
What else should you read before closing?
In the glossary
- Proprietary leaseThe occupancy lease a co-op corporation grants a shareholder for a specific unit. It is assigned at closing together with the stock certificate for...
- 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...
- 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...
- 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 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...
- 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.
- What is the risk in a land lease co-op?A land lease co-op rents the ground under the building. Rent resets can raise maintenance sharply and the lease end date limits financing and resal...
- 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
- CondopA building split into two condominium units, one commercial and one residential, where the residential unit is owned by a cooperative corporation.
- Mixed-use condo with commercial unitsA condominium holding both residential and commercial units, where the declaration allocates common charges, voting rights and use restrictions bet...
- Standard co-opThe ordinary New York City cooperative: you buy shares in a corporation and receive a proprietary lease to occupy a specific apartment.
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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.