Q: What is a co-op? And, as a British person residing in the UK, what are my options with regards to purchasing a property because I notice that co-ops have buying restrictions.
A: A co-op is a common form of ownership in New York, and differs from a condominium in several ways. The cooperative corporation owns the building, and acts as landlord to the tenants, who are each entitled to occupy an apartment pursuant to a “proprietary lease.” When one “buys” an apartment in a co-op, they become both a shareholder of the corporation, with a stock certificate issued for a certain number of shares commensurate with the size and location of their apartment relative to others, as well as a tenant of the corporation, with rights to occupy their apartment as determined by the lease.
Generally, both sublets of the apartment and sales are subject to the approval of the co-op, and can be denied for any reason deemed in the interest of the co-op, provided the reason does not conflict with applicable law. Co-op apartments can be financed if the corporation permits it, and most do, and the appreciation in the apartment’s value generally accrues to the owner of the stock and lease, subject to some co-ops’ “flip tax” rules, which require a fee be paid upon transfer to another. Alienage is a protected class under the New York City Human Rights Code, so discrimination on this factor violates applicable law. Co-ops may, however, impose restrictions against “absentee” owners who are not using the apartment as a primary residence. Consult a Prudential Douglas Elliman agent for guidance on selecting the right co-op for your needs.