What are the privileges of owning a co-op apartment in New York?
Coops are a creature of New York. Originally conceived in the late 1800s to persuade home owners to live on top of each other instead of side by side, the coop is premised upon the idea of a social club. Coop owners, through their boards of directors, are entitled to choose who their neighbors are. Provided that federal and state discrimination statutes are not violated, a coop board may reject a potential purchaser or subtenant for any reason or for no reason. As housing becomes more scarce in the city, coop boards are exercising this veto right with increasing regularity.
When buying a coop you are not buying real property. Instead you are buying a long-term lease and the right to sole and exclusive possession of your apartment for an indefinite period. The coop board acts very much like a landlord and you are entitled to demand from the board the same services and attention you expect in a rental building. The coop board bills you every month for a pro-rated share of the total cost of running the building, usually including the monthly costs of a mortgage on the entire building. You pay this monthly bill, called maintenance, in addition to any bank loan you obtained to purchase the apartment.
PROS: coops are generally cheaper than condos, have lower closing costs and give you greater protection against unruly neighbors.
CONS: coops are more difficult to sell, are very difficult to rent (unless the board of directors allows liberal subleasing), have greater monthly costs, actual and potential.