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Co-op and Condo Transactions
Purchasing a cooperative apartment or condominium in New York involves legal considerations that do not arise in a standard home purchase. Co-op transactions require board approval, a review of the proprietary lease and house rules, analysis of the building’s financial condition, and compliance with the board’s application requirements. Condo transactions involve review of the offering plan, bylaws, and common charge obligations. Both require attorney representation from contract through closing.
Parandian Law represents buyers and sellers in co-op and condo transactions across Westchester County and New York City. We handle contract review and negotiation, board package preparation, offering plan analysis, title review for condominiums, and closing representation. We advise clients on the legal differences between co-op and condo ownership so they understand what they are buying before they commit.
The co-op board must approve any purchase. In New York City, boards have broad discretion to reject a purchaser without providing a reason, and that discretion is generally protected by the business judgment rule. In Westchester County, local law requires co-op boards to provide written reasons for a rejection and prohibits rejections based on protected characteristics. A board rejection terminates the transaction and the buyer recovers their contract deposit.
Co-op Attorney New York · Condo Attorney Westchester · Cooperative Apartment Attorney · Board Package Attorney · Co-op Closing Attorney · Condo Purchase Attorney · New York City Co-op Attorney · Westchester Condo Attorney
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New York commercial real estate framework
Co-op and condo transactions — the essentials
A cooperative apartment is not real property in the traditional sense. When you buy a co-op, you are purchasing shares in a corporation that owns the building and receiving a proprietary lease giving you the right to occupy your unit. There is no deed and no traditional mortgage. Financing is done through a share loan, and the co-op corporation holds the underlying mortgage on the building. The proprietary lease governs your rights as a shareholder, including subletting rights, renovation approval requirements, and the circumstances under which the corporation can terminate your occupancy. The co-op board must approve any purchase, and approval is entirely within the board’s discretion. A board rejection terminates the transaction and the buyer recovers their contract deposit.
A condominium purchase is more similar to a standard real estate transaction. The buyer purchases a unit and receives a deed. Title insurance is available and standard. Financing is through a conventional mortgage. The buyer is subject to the condominium’s bylaws, house rules, and common charge obligations set out in the offering plan. New York’s Martin Act governs the offering of condominium units for sale and requires a detailed offering plan to be filed with the Attorney General’s office before units can be marketed. We review the offering plan, bylaws, and financial statements of the condominium association as part of due diligence on every condo purchase.
Key FACTS
Co-op ownership:
Shares in corporation plus proprietary lease
Condo ownership:
Deed to individual unit
Share loan, not a mortgage
Conventional mortgage available
Board approval:
Required for co-op, sometimes condo
NYC co-op rejection:
Co-op board may reject without explanation
Westchester co-op rejection:
Written reasons required by local law
Offering plan:
Required for condo sales under Martin Act
Flip tax:
Common in co-ops, paid at sale
What we handle
Co-op and condo transaction services
Buyer and seller representation for cooperative and condominium transactions across Westchester County and New York City.
Contract review and negotiation
Review and negotiation of co-op and condo purchase contracts before signing, including deposit terms, board approval contingency, closing date, and any representations regarding the unit’s condition. We identify terms that require modification and negotiate on behalf of our client before they are bound by the contract.
Board package preparation
Guidance and review of co-op board application packages, including financial statement presentation, reference letter requirements, and compliance with the board’s specific application requirements. A well-prepared and complete board package reduces the risk of delay and presents the buyer in the strongest possible light to the board.
Offering plan and due diligence review
Review of condominium offering plans, bylaws, house rules, financial statements, and common charge histories as part of due diligence on every condo purchase. For co-ops, we review the proprietary lease, house rules, underlying mortgage, and building financial statements to advise the buyer on the obligations and restrictions they are assuming.
Closing representation
Representation at closing for both buyers and sellers in co-op and condo transactions, including review and execution of all transfer documents, share certificates and proprietary leases for co-ops, and deeds and title documents for condos. We coordinate with managing agents, lenders, and the opposing attorney to ensure a smooth closing.
How it works
Our co-op and condo transaction process
01
Contract review and negotiation
We review the purchase contract before our client signs and negotiate any modifications needed to protect their interests, including the board approval contingency period and the consequences of a board rejection. For sellers, we review the contract from the seller’s perspective and advise on representations and closing conditions.
02
Due diligence and board package
For condo purchases, we review the offering plan, bylaws, and financial statements during the due diligence period. For co-op purchases, we review the proprietary lease, house rules, and building financials. We also assist the buyer in preparing and reviewing the board application package to present the strongest possible application.
03
Board approval and closing preparation
We monitor the board approval process and advise on next steps once approval is received. We then coordinate with the managing agent, lender, title company, and opposing counsel to prepare closing documents and confirm all conditions to closing are satisfied before the closing date.
04
Closing and post-closing
We attend the closing and review all documents with our client before signing. For co-op closings, we oversee the transfer of share certificates and proprietary lease. For condo closings, we confirm deed recording and title policy issuance. We handle any post-closing follow-up with the managing agent or title company.
Common questions
Co-op and condo transactions FAQ
What is the difference between buying a co-op and buying a condo?
When you buy a condo, you own your unit outright and receive a deed. You can typically finance with a standard mortgage, and title insurance is available. When you buy a co-op, you purchase shares in a corporation and receive a proprietary lease giving you the right to occupy your unit. There is no deed. Financing is done through a share loan rather than a mortgage, and the co-op board must approve you as a shareholder. Co-op boards are generally more restrictive than condo boards and have broad discretion to reject purchasers. Co-ops are generally less expensive than comparable condos in the same building or neighborhood, in part because of the board approval requirement and financing restrictions.
Can a co-op board reject my purchase?
It depends on where the co-op is located. In New York City, co-op boards have broad discretion to reject purchasers without providing a reason, and courts generally will not second-guess a board’s decision absent evidence of discriminatory motivation or a violation of the cooperative’s own rules. In Westchester County, local law requires co-op boards to provide written reasons for any rejection and prohibits rejections based on protected characteristics including race, national origin, and other protected classes. A rejection in either jurisdiction does not result in forfeiture of the contract deposit, which is returned to the buyer. We advise clients on the applicable rules based on the location of the co-op and help prepare applications that address common board concerns.
What is a flip tax and who pays it?
A flip tax is a transfer fee charged by a cooperative corporation when a shareholder sells their unit. It is not a government tax but rather a fee imposed by the co-op under its proprietary lease or house rules, used to fund the building’s reserve account. Flip taxes are common in New York City and Westchester County co-ops and can range from a flat fee to a percentage of the sale price or a per-share amount. The proprietary lease specifies whether the flip tax is paid by the seller or the buyer, though it is most commonly the seller’s obligation. We review the proprietary lease and advise sellers on the flip tax obligation before they commit to a sale price.
What should I look for in a condominium offering plan?
A condominium offering plan is a detailed disclosure document filed with the New York Attorney General’s office that describes the condominium, the units being offered, the common elements, the budget, the sponsor’s obligations, and the rights and obligations of unit owners. Key items to review include the common charge budget and whether it is realistic, the reserve fund adequacy, any sponsor control provisions that give the developer ongoing authority over the board, unsold unit percentages that may affect financing, pending litigation involving the condominium, and any special assessments. We review the offering plan as part of due diligence on every new construction or sponsor unit condo purchase.
Related services
Often considered alongside Co-op and Condo Transactions
Purchasing or selling a co-op or condo in New York?
Co-op and condo transactions involve legal considerations that do not arise in a standard home purchase. Get experienced counsel on your side before you sign the contract.
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