Cooperatives, or co-ops, comprise a significant portion of New York City’s real estate market. When purchasing a cooperative apartment, one purchases shares of stock in a corporation that owns the building and usually the land beneath.
A stock certificate representing the purchased shares and a proprietary lease giving the right to occupy the apartment are conveyed at closing. The size of the apartment and its amenities determine the number of allocated shares, which therefore determines the amount of maintenance. Maintenance fees cover the operating costs of the building such as upkeep of common areas, staff salaries, as well as payment of real estate taxes and interest on any underlying building mortgage.
A Board of Directors, whose duties are to conduct the business of the corporation and oversee the management company of the building, is elected from among the shareholders. Typically, the Board or an interview committee reviews the application of each prospective shareholder or lessee and presides over a personal interview prior to approving any purchase or lease. The Board has the right to approve or deny any applicant without cause.
Most co-ops require shareholders to occupy their apartments as primary residences; however, depending on the building, there may be an allowance for subletting. A prospective lessor is required to submit a formal application and personally interview with the Board for its approval. Duration varies from building to building, so be sure to ask your agent to confirm.