What Is a Co-op Apartment in NYC?

One of the first questions home buyers have when they start searching for an apartment in New York City is what is a co-op? To be more specific, what is a coop apartment in NYC?

A co-op apartment, also known as a coop, a cooperative, or a co-operative apartment, is a form of living that is very common and unique to New York City. A co-op is a form of housing where a cooperative corporation owns an entire apartment building.

Shareholders are issued a stock certificate and a proprietary lease to occupy a specific apartment in the building. Owning a co-op apartment means that you own shares and a proprietary lease as opposed to owning a deed to real property like you would for a freestanding house or a condo.

Therefore, co-op apartment owners are technically shareholders of a corporation that owns the building, versus outright owners of real property. Furthermore, because a shareholder is allowed to occupy their apartment through the proprietary lease, they are technically tenants versus owners of their apartment.

The cooperative corporation is run by a board of directors elected by the shareholders.

What Are the Advantages of Buying a Co-op Apartment in NYC?

The primary advantage of buying a coop in NYC is that they’re less expensive than comparable condominium apartments. This is because most investors and foreign buyers aren’t interested in co-ops since most have subletting restrictions and a more arduous purchase process compared to condos and townhouses. There are also more co-ops than condos in NYC, so the combination of greater supply and less demand makes them less expensive than condos.

Besides affordability, another reason some New Yorkers prefer coops is because of the ability to regulate and choose who your neighbors will be. That’s because coop boards have the power to reject prospective purchasers for any reason, without ever having to disclose the reason for rejection.

What Are the Disadvantages of Buying a Co-op Apartment in NYC?

If you’ve ever been annoyed at nosy or bossy neighbors, then you may want to avoid having to live in a co op. Coop boards in New York City are notorious for their strict house rules and onerous penalties for non compliance. Furthermore, because a coop board is just like a board of directors of a regular business corporation, they have tremendous power over the tenant shareholders and life in general in the building.

They can enact new fines and rules, and punish tenant shareholders who break the rules. Often times there is no way to appeal a fine even if you feel that it was unjust. Would you really sue your own building over a small fine? It’s a tough situation that many co op shareholders have to deal with on a regular basis.

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