Buyer's Guide

What is a condo?

A condominium apartment is “real property”. Buyers receive deeds, as with the purchase of a house or parcel of land. Because a condominium is considered “real property”, separate taxes are imposed on each apartment (unlike a co-op where taxes are imposed on the building, and each shareholder is allocated a portion, based on shares, that is included in the monthly maintenance fee). There is a monthly common charge that covers the daily maintenance of the building, but unlike a co-op, it is not tax deductible. The monthly real estate taxes and maintenance are generally lower, and resale prices are generally higher.

Financing is more flexible—a 10% down payment is typically sufficient. Also, subletting is not subject to tight restrictions, so it is common to find many investor-owned apartments.

What is a co-op?

Cooperatives are owned by an apartment corporation. Buyers purchase shares within the cooperative corporation that entitle them to long-term proprietary leases. Buyers are not technically “owners”; they are “shareholders” who own a percentage of the total shares of the corporation. Shares are distributed among apartments in proportion to square footage and unique unit features (terrace, skylights, views, etc.).

Co-op shareholders pay a monthly maintenance fee that covers the general expenses of the building. (General expenses consist of building insurance, real estate taxes, the cost of materials and services used for maintenance, the salary of lobby attendants and staffed personnel, etc.) Portions of the monthly maintenance fee are tax deductible. Shareholders are also subject to “special assessment” fees in addition to the monthly maintenance fee, which cover unanticipated building repair and improvement costs.

All prospective purchasers are interviewed by the building’s Board of Directors. A down payment of 20-25% of the total apartment price is typically required. Subletting is permissible, but is subject to limitations and board approval. This aspect makes a co-op unattractive for investors.

Condominium Apartments and 1- to 5-Family Buildings - Closing Costs:


Buyer's Attorney: $800 +
Bank Fees:  
Points: 0 to 3% of loan value (optional)
Application: $300–$500
Bank Attorney’s Fee: $500
Bank Underwriting Fees: $350
Bank Appraisal Fees: $275–$1000
Recording Fees: $100–$300
Mortgage Tax: 1.75% of amount of mortgage on loans under $500,000
1.875% of amount of mortgage on loans at or over $500,000
Fee Title Insurance: Approximately $450–$650 per $100,000
Mortgage Title Insurance: Approximately $300–$500 per $100,000
Violation Search: $170
Managing Agent Fee: $250
Common Charge Adjustment: Pro-rated for the month of closing
Real Estate Tax Adjustment: 1–6 Months
Mansion Tax: 1% where price exceeds $1,000,000

Cooperative Apartments - Closing Costs

Buyer's Attorney: $800 +
Bank Fees:  
   Points 0 to 3% of loan value (optional)
   Application $300–$500
   Bank Attorney’s Fee $500
   Bank Underwriting Fees $350
   Bank Appraisal Fees $275–$1000
   UCC-1 Filing Fee $20
Short Term Interest: Equal to interest for balance of month in which you close
Recording Fees: $100
Mortgage Tax: 1.75% of amount of mortgage on loans under $500,000
1.875% of amount of mortgage on loans over $500,001
Lien Search: $250
Moving Deposit: $500
Monthly Maintenance Adjustment: Pro-rated for the month of closing
Mansion Tax: 1% where price exceeds $1,000,000