The real estate market is composed of several distinct types of residential property: Condominiums, Coops and single and multi-family residences.
Definition of a ‘House’ in New York City
The term ‘house’ in New York City generally refers to a one to four family residence. In New York City these homes take different forms like town houses which often cost millions of dollars. Most of the 3000 town houses that exist on the island of Manhattan were built in the late 19th or early 20th century and now constitute some of the most expensive residences in the city. Sometimes these townhomes are divided into condominium apartments and house more than one family.
Many of the town houses which are found in Brooklyn Heights and Park Slope are called ‘brownstones’ because they are made of a brown triassic sandstone which was once a popular building material. When you own a home in New York City you receive a deed to the home and the land which gives you a “fee-simple” ownership of real property. As a homeowner in New York City you are responsible for payment of real estate taxes, insurance, utility and maintenance costs of your house.
In New York City, a condominium apartment is an apartment whose interior space you own outright. Owning a condominium is quite similar to owning a home. In addition to owning your own apartment space you also own an undivided portion of the building which is known as a common area. A condominium is governed by an elected board of managers whose powers are derived from a declaration of condominium and bylaws. This board makes all the financial decisions for the condominium and also determines the amount of common charges that are needed to be paid by each unit owner in order to finance the buildings operating expenses. In addition to these common charges, the unit owner also has to pay real estate taxes which are determined by the tax authorities. The board of a condominium cannot prevent the unit owner from renting or selling the unit. Further if you want to alter the interior of your condominium the board cannot really stop you unless it affects the structure of the building or a neighbor’s apartment. Many foreign buyers who wish to invest in New York City’s real estate market tend to buy condominium apartments as they can rent them easily if they choose not to stay in them. This is the major advantage of owning a condominium as it can be used as an income generating asset. Nowadays several condominiums developments in New York City are equipped with coveted facilities like fitness rooms, swimming pools, outdoor decks and common party or lounge areas.
Co-operatives, or ‘Co-ops’ as they are commonly known, are a distinct feature of New York City’s real estate scenario. In a co-operative, a cooperative corporation owns the building, including the individual apartments and the common areas. When you buy an apartment in a co-op in New York City, you are allotted a share certificate which is allocated on the basis of the size and the location of your apartment. As a shareholder you are entitled to a proprietary lease from the corporation. This lease which is known as a proprietary lease gives you the right to live in a particular apartment.
Further, each shareholder can obtain a loan for the purchase of his or her apartment, though in a co-op building the corporation can limit the amount of money that a purchaser may borrow. This amount generally equals between 50 to 80 percent of the purchase price.
A co-op is generally governed by an elected board of directors who make all decisions regarding the operation of the property. The board also determines the maintenance charges to be paid by each shareholder. These maintenance charges are raised every month and are used for repairs and capital improvements of the building.
The board also determines whether a particular person is suitable to be a shareholder in the co-op. For this the board asks to examine the person’s financial credentials before he or she is allowed to buy space within the building. Some co-op boards in New York City are notorious for being extremely tough on buyers. Moreover these co-op boards also govern the right of a shareholder to sublet his or her apartment. Generally, a condominium apartment in New York City can be more easily rented out than a co-op apartment. Hence condominiums in New York City tend to be priced higher than co-op apartments, though co- ops have their own unique ‘prestige’ appeal.
While apartments are the most popular form of accommodation in the borough of Manhattan, single and multi-family residences dominate the real estate landscape in the outer boroughs.