Condominum

Estimated time to close purchase 1-2 months

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In a co-op, owners only own their unit and common grounds until they decide to move, at which point ownership transfers back to the corporation. They cannot transfer title or ownership at any point and in reality never truly own anything. Condominiums are a different story. When buyers purchase a condo, they receive a deed and yearly taxes and other ownership fees. They can sublet their condo or sell it outright if they so choose. Some advantages of condos over co-ops include:

1. Comprehensive financing options; most condo buyers can finance up to 90% of the condo's selling price
2. Easier application process with higher acceptance ratios
3. Less common and maintenance charges

A disadvantage of purchasing a condo is the higher overall cost, since there aren't nearly as many condos as there are co-ops. This is changing quickly as new condo developments pop up all over the New York area. 

Overview

As more and more new buildings are constructed in New York, condominiums are fast gaining in number and popularity. It's not surprising considering the ease of buying a condo rather than a co-op. As opposed to a co-op, a condominium apartment is "real" property. A buyer receives a deed just as though he or she were buying a house on an individual plot of land. Each individual apartment in a condominium receives its own tax bill. There is still a monthly common charge similar to the maintenance charges in a co-operative.

These charges don't include your real estate taxes and are not tax-deductible. They also tend to be lower than in co-ops because there is no underlying mortgage for a condominium building. The straightforward nature of buying a condo coupled with the fact, that in some cases, you can finance up to 90% of the purchase price and sublet them at will, makes condominiums the number one choice for flexibility. Young buyers, investors, and buyers that choose to use creative financing are urged to consider condominiums.

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Cooperative

Estimated time to close purchase 3-4 months

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With nearly 80% of the ownership opportunities coming from the co-operatives, this method of ownership is the most popular. Advantages of purchasing a co-op over a condo include:

1. Higher visibility and availability for buyers
2. Lower cost due to competition
3. Owners receive "shares" in the entire building--and therefore own--the building's common features
4. Owners may be eligible for a number of tax deductions

Co-operatives are started and run by corporations. Instead of selling units to individuals in exchange for rent, New York City co-ops sell "shares," which include both the residence and a portion of the common areas of the building, including the laundry or fitness area, lobby, etc.

The corporation first pays the real estate taxes, mortgage of the building, salaries and maintenance; that cost is then split among the owners of the residences, each owner paying an amount that is in relation to the "share" that he or she has in the building.

In a co-op, the building's Board of Directors decides whether to accept applicants as owners or not. A potential buyer fills out an application and interviews with a representative of the building. Rules and ownership details vary by building, so ask for additional information before agreeing to buy. Also, ask what the corporation's tax structure is, as owners are sometimes eligible for tax deductions.

One of the only disadvantages of living in a co-op is the extreme down payment expected. Although financing is an option for some, most will be expected to pay quite a bit more than the traditional ten percent down. 50% is not uncommon, and some co-ops don't finance at all, expecting full payment up front.

A co-op Board of Directors has the ability to determine how much of the purchase price may be financed and minimum cash requirements. Generally co-op apartments require a larger down payment than most condominium apartments, especially in top buildings, whose ownership requirements may be stringent.

Subleasing a co-op can be difficult. Each co-op has its own rules and they should be carefully reviewed prior to application to purchase.

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