What to know about: buying a New York condo

Condominiums (”condos”) are quite popular and common throughout the rest of the U.S., however New York condos are a rather new concept.

A condo apartment is real property – buyers get a deed just as though they were buying a house. Since this is real property, there is a separate tax lot for each apartment. This means that New York condo owners pay their own real estate taxes for their property. A New York condo owner will also pay common charges on a monthly basis. Common charges are similar to maintenance in a co-op; however, common charges include neither real estate taxes nor the building’s mortgage and interest because, by law, a New York condo, or anywhere for that matter, cannot have an underlying mortgage.

New York condos are attractive for the following reasons:

• Financing the purchase of a New York condo is much more flexible than a co-op. In the past, buyers could finance up to 90% of the purchase price. Since the credit crisis, banks’ lending practices have become more stringent. Buyers of New York condos should consult a mortgage professional for current financing options.
• While there is an application process, the  process of buying a New York condo is not as formal as in a co-op. The likelihood of rejection is minimal.
• There is greater flexibility in sub-leasing a New York condo vs. a co-0p. This often makes condos a better investment choice than co-ops.
• New York condos are the ideal choice for non-U.S. citizens or for those with assets held outside of the United States because co-ops are unlikely to approve these types of buyers.

New York condos are generally more expensive than co-ops for a number of reasons. There are fewer New York city condos than cooperatives, the buying process is easier, and the combined monthly common charges and real estate taxes for a New York City condo are typically lower than a co-op’s monthly maintenance charges (often because a co-op may have an underlying mortgage).

Steps to purchasing a New York condo

1. Offers are made verbally in New York City. When you have found the right property, your agent will convey your offer to either the seller’s agent or to the seller directly.
2. The seller may “counter” your offer thereby beginning the negotiation process in which both parties agree upon price, terms, and closing date.
3. All deals for New York condos require a real estate attorney. Your real estate agent can assist you in finding experienced attorneys. The seller’s attorney will begin preparing a contract of sale, during which time your attorney will begin to examine the financial condition of the building in which you wish to purchase.
4. After concluding that the building’s financial condition is satisfactory, and the contract of sale and by-laws of the building are acceptable, your attorney will allow you to sign the contract. At that time you will typically be required to present a deposit of 10% of the purchase price. The contract plus the deposit will then be forwarded to the seller for signature. The deposit will be held in the seller’s attorney’s escrow account until closing. Until the contract has been delivered and signed by all parties, the seller can still entertain and accept other offers.
5. If you are financing your New York condo purchase, you should move forward with your loan application. Your real estate agent can assist you in finding a mortgage broker. We advise our clients to pre-qualify for a mortgage at the outset of their housing search.
6. By now, you will have received from your real estate agent the board requirements and application materials. You will need to complete all of the required materials, which typically include: an application, a financial statement signed by a CPA, all requisite support for your financial statement, three years of tax returns, bank statements, letters of personal and financial reference, letters of professional reference, the contract of sale, bank documents indicating that your loan is in place (if financing), etc. Although the application materials for a New York cooperative and New York condominium can be similar, the actual process is quite different.
7. When your “package” is finished, your agent will forward it to the Managing Agent. Once the Managing Agent determines that your application is complete and all credit checks are approved, your package will be forwarded to the Board of Directors. Managing Agents will not accept applications unless the application is complete.
8. The entire process can move quickly for a New York condo, and assuming a loan can be secured in a timely fashion, the process can move from contract to closing in about 60 days. Note for comparison, the cooperative process is more involved and may take much longer than 60 to 90 days.
9. After Board approval, begin planning your closing.

For independent reviews and profiles of top agents who know the ins and outs of buying and selling New York condos, visit TopAgentGuide.com.

Tags: condos, Mahattan condos, New York condos