One of the most popular topics that come up during my conversations with first-time home buyers looking for an apartment in New York is Co-op vs. Condo. Unlike everywhere else in the US co-ops constitute the majority of apartments in NYC. Around 70% of all residential buildings are co-ops, while condos constitute the majority of apartments built in the past 20 years. Aside from the age of the apartment building, there are many crucial differences between coops and condos and the choice usually depends on the client’s situation and personal inclinations. For more information, speak with a reputable New York City real estate attorney. DIFFERENCES IN OWNERSHIP BETWEEN A CO-OP & A CONDO1. Ownership – Purchasing a condo is similar to purchasing a house. At the closing you will receive a deed to your new apartment as well as share of the interest in the building’s common areas. If you purchase a co-op, you technically do not own your apartment from a legal standpoint. Rather, the entire building is owned by a single corporation. At the closing you are purchasing shares in this corporation as opposed to the actual apartment. In most cases, the larger and more expensive the apartment you are purchasing, the more shares you will receive. At the closing, simultaneous with the purchase of shares, corporation will sign a lease with you that gives you the right to occupy the apartment you have just bought. CONDO VS CO-OP PRICES IN NEW YORK2. Costs to Purchase – In NYC, the purchase prices of co-ops are usually much less expensive than condos, and you can receive more bang for your buck, so to speak, when it comes to square footage. Purchasing a condo can also mean higher closing costs, since you will be required to purchase a title insurance and pay a mortgage tax if you choose to finance your new home; neither of which are required when purchasing a co-op. Speaking of mortgages, condos may offer more flexible options if you do not have a large amount of cash for a down payment. Some co-op boards require a higher down payment than condo buildings, in addition to a year or two worth of mortgage and maintenance charges left over in your checking or saving account after the down payment. This is called a liquid assets requirement and the exact amount varies from building to building. Although by purchasing a co-op you’ll save on the title insurance and mortgage tax some co-op buildings have a flip tax. Flip tax is not an actual tax. It is a transfer fee charged by the co-op to the buyer or seller and can be as much as 3% or more of the entire purchase price. HOW MUCH WILL IT COST ME TO OWN MY APARTMENT?
3. Monthly Expenses – Both condos and co-ops have monthly charges (respectively referred to as common charges and maintenance fees) which you will be required to pay toward the operation and maintenance of the building’s common areas. These monthly charges vary and things like the size of the building, number of amenities, etc. will affect the amount that you will end up paying. Both condos and co-ops can also charge assessment fees for building renovation projects, such as the installation of a new elevator. The main difference between a condo’s common charges and a co-op’s maintenance fees is that the maintenance fees include charges for a percentage of the building’s property tax, calculated according to the number of shares you own. If you own a condo, you are responsible for paying your unit’s property taxes directly to the government, which will likely cause your overall monthly costs to be greater than they would be for a similarly sized co-op. DO CONDOS HAVE BETTER AMENITIES THAN CO-OPS?4. Location and Amenities – Many of the newer developments in NYC are condos rather than co-ops. These buildings usually include many luxury amenities such as fitness centers, spas, pools, concierge services, etc., and have an overall newer, trendier feel. However, most of the classic, “Old New York” pre-war buildings are co-ops. These buildings often have larger apartments with more ornate décor such as crown moldings, fireplaces, etc. Of course, this is all a matter of personal preference. Location may also play a factor as well. For example, many of the buildings in the Battery Park and in the Financial District are condos, while many of the buildings located around Central Park, on the Upper East Side, and in Gramercy Park are co-ops. CAN THE CO-OP BOARD PREVENT ME FROM BUYING OR SELLING MY APARTMENT?
5. The Board Approval Process – While both condos and co-ops elect a board of directors to make important decisions regarding the maintenance and upkeep of the building, the co-op board wields MUCH greater power. In extreme cases, the co-op board can even evict a shareholder that it deems disruptive. When buying a co-op, you must go before the board and submit to a potentially arduous approval process. The board will go over your finances and credit, and review your debt-to-income ratio, which they usually expect to be between 25% and 30%. The process involves a great deal of paperwork, which may often require the assistance of an attorney to prepare. The board can reject you for any reason (except for reasons of race, religion, disability, etc. which are protected by law.) However, the board does not have to specify the reason why they reject your application. There is always the risk that you will spend significant time and energy going through the approval process, only to be rejected. Looking to sublet your apartment? Co-op boards usually have much stricter subletting policies, making condos a better choice for those looking to purchase an investment property. Although when purchasing a condo (unless it’s a new construction) you will have to fill out the board application as well, the condo board does not have the right to reject a buyer regardless of the buyer’s financials, credit, etc. Condo board’s have what’s called the right of first refusal pursuant to which the board’s sole remedy is to purchase the apartment from the seller upon the same terms as are being offered to the purchaser. The chances of the board actually exercising their right of first refusal are slim to none. SO WHAT’S BETTER CO-OP OR CONDO?Overall, the decision between a condo and a co-op is a personal one. Both have their pluses and minuses. Condos often cost more but allow a greater degree of freedom and flexibility than co-ops, and an easier approval process. With co-ops you can save on closing costs, afford more square footage and have lesser monthly fees, but you may lose the flexibility that is offered by condos. PLANNING TO BUY AN APARTMENT? CONTACT US FOR A FREE CONSULTATION WITH AN EXPERIENCED NYC REAL ESTATE ATTORNEYDisclosure: This is a blog by NYC real estate attorney. The materials contained here have been prepared for general informational purposes only and shall not be used as a substitute for consultation with a lawyer or interpreted as legal advice. Via https://www.avenuelawfirm.com/coop-vs-condo/
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If you are a new business owner who is taking the important step of leasing your first commercial space, you should be aware that commercial leases are subject to some unique considerations that would not necessarily apply to residential leases, such as an apartment lease. In many jurisdictions, commercial tenants are not guaranteed the same rights as residential tenants. In the commercial leasing environment, both tenant and landlord are persons or entities engaged in business pursuits; as such, a commercial lease is generally viewed as an equal bargaining transaction between the two business interests. For example, in New York, the respective rights and duties of the landlord and tenant are almost entirely defined by the terms of the lease itself, with very little statutory or regulatory protection for the parties. In plainer terms, the courts will not be sympathetic to issues arising out of your failure to thoroughly read and understand the terms of your commercial lease. For this reason, it is crucial to have a NYC real estate attorney experienced with commercial leasing review your lease prior to you signing it. RENT PROVISION IN A COMMERCIAL LEASEThis is not as straightforward as a rent clause in a residential lease. In addition to monthly rent your landlord may ask you to pay real estate taxes and maintenance costs. Make sure you understand if operational costs such as electricity, trash removal, water, property taxes, etc. will be handled by you or by the landlord. Almost every office and retail lease provides for some form of escalation of the rent. Most of the time rent increases by a certain percentage each year. Sometimes rent escalations are tied to Consumer Price Index (CPI). WHO IS RESPONSIBLE FOR IMPROVEMENTS, ALTERATIONS, AND REPAIRS?In residential leases, the landlord is usually responsible for all repairs and maintenance of the property. However, commercial properties are commonly rented “as is”. Unless specifically stated in the commercial lease, the landlord does not have an obligation to maintain or repair your premises, or to maintain the common areas. It is paramount that you understand your obligations and have a financial plan for dealing with potential emergency maintenance that you may be held responsible for. CAN I SUBLEASE MY COMMERCIAL SPACE?Unforeseen circumstances can pop up for the best of us. If you no longer need the entire commercial space for yourself, will you be able to sublet all or a portion of it? The right to sublease is governed by your commercial lease. Make a note of whether or not subleasing is permitted. Even if it is, most commercial leases require you to get your landlord’s consent prior to subleasing the space. It is not uncommon for landlords in New York to charge tenants for such consent or to request a portion of the rent that you will receive from your tenant. Therefore, it is very important to carefully review the portion of your commercial lease agreement that deals with your rights to sublease the rented space and to discuss the process and all the fees with your landlord prior to signing the commercial lease. DO I HAVE AN OPTION TO RENEW MY COMMERCIAL LEASE?It’s always good to plan ahead. Let’s say that you signed a five-year commercial lease and your business is booming at the end of this term. Many businesses depend on their location and moving may result in your business loosing clients. Would you really want to be forced to pack up and move to a new location, possibly disturbing business and confusing your clients? A good commercial lease attorney will always advise you to negotiate an option to renew the lease. BREACH OF CONTRACTWhat will happen if one party doesn’t comply with the terms of the commercial lease? Is there a procedure or timeframe for written demands before litigation? What about mediation or arbitration? If it does come down to litigation, who is responsible for attorney’s fees, etc.? Make sure that the terms are clear and fair before signing. WILL THIS COMMERCIAL LEASE WORK FOR ME?You may have found a perfect space, but will the lease work for you? Many commercial leases have restrictions and it’s important to consult with a real estate attorney to make sure that you will be able to run your business without breaking any of those restrictions. Will you have 24/7 access to the space? Can you place a sign? Can you renovate the space? Will your use comply with the certificate of occupancy? Are there any noise restrictions? Typically, commercial leases contain provisions that state you can’t disturb or interfere with the business operations of other tenants. For most tenants this is not an issue. But for some, such as, pre-K, recording studios, and large health care facilities, such provisions can be deal breakers. Signing a commercial lease is a big step and one that you may have to live with for years or even a decade. It is a good idea to consult with an experienced real estate attorney before signing anything. Your attorney will have your best interests in mind and will often be able to work with the landlord or the landlord’s attorney to come up with terms more favorable to you and your business. Contact a reputable real estate attorney from Avenue Law Firm today by calling (212) 729-4090. Written by Petro Avenue, Esq Via https://www.avenuelawfirm.com/things-consider-signing-commercial-lease-nyc/ |
About UsAvenue Law Firm is a team of experienced New York real estate attorneys and is with you each step of the way. Our highly skilled lawyers have dedicated our years of experience to making sure our clients receive the best legal assistance possible. If you need legal assistance with real estate law, personal injury law, and business law in New York, call us at (212) 729-4090. FIND US ONLINE Bitly Box Diigo Dropbox Evernote Postach.io Histre Inoreader Instapaper Nimbus OneDrive Onenote Raindrop.io Todoist Toodledo Trello Tumblr Weebly Wordpress Blogger Google Drive Youtube Map Related Links About.me Behance.net Dribbble.com Taplink Gravatar.com Link.Bio Minds Justpaste.it Issuu.com Linkhub Solo.to Archives
May 2023
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