When you buy a unit in a housing cooperative, you purchase stock in a corporation that owns the building. You must have approval from the board of directors to do so. While you get a mortgage to buy the unit, you also pay a fee for building upkeep and other associated costs.
Purchasing a co-op unit in New York has unique benefits and drawbacks. Review the common considerations to keep in mind when shopping for this type of home.
Read the bylaws carefully
Every co-op owner must follow the official bylaws or risk fines and other sanctions. Some cooperatives have common, reasonable restrictions, such as limits on the size or number of pets. Others, however, may restrict overnight guests or have other rules that do not fit your lifestyle. Walk away from a building with rules you find too restrictive.
Understand the financial obligation
Obtaining approval for a co-op unit goes beyond showing your ability to pay the mortgage. The board of directors also establishes its own guidelines for economic approval. For example, you typically must also demonstrate at least 24 months of monthly maintenance fees in the bank in case of job loss.
Review the corporate documents
Do not sign a contract that waives your right to see the co-op documents. These items, including tax returns, financial statements, meeting minutes and offering plan, paint a clear picture of the organization’s finances and future.
Experience is one of your most important assets when purchasing a co-op unit. Rely on the knowledge of professionals who have worked extensively with this type of real estate when negotiating a purchase contract.