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What should you know about buying a New York City co-op?

Buying a unit in a co-op is different from buying another type of residential property in New York City. Before you enter into a contract, you should understand what makes this home purchase different.

1. When you buy a co-op, you are buying a share in a corporation that entitles you to live in the unit. When you buy a condo, townhouse or single-family home, you are buying real property.

2. A co-op could require a large downpayment -- often as high as 40% in exclusive buildings. Know the required downpayment of each co-op you are considering.

3. A co-op board will expect you to have access to liquid assets after closing. A minimum expectation is that you'll have 24 months of mortgage payments and monthly association dues available. That includes cash, stocks and bonds or other holdings that can be converted to cash. Some boards will require more liquidity.

4. Is it possible to sublet? Co-ops like to have owners live in their apartments in the belief that since they are invested in the property, they will take better care of it. Sublet allowances vary by building, so that's a question you'll need to ask.

5. You'll likely pay a flip tax. It isn't really a tax. Rather, it's a fee paid to transfer the unit during a sale transaction. It, again, varies from building to building.

6. If your family is helping out with the purchase, make sure that gifting or co-purchasing is allowed. Sometimes it isn't.

7. Set aside money for closing costs. You can expect to pay 1% to 2% of the purchase price of an apartment up to $1 million. If it costs more than that, expect to pay as much as 3% of the price.

8. Know that you can't make any changes you want. Co-op boards typically must approve all renovations and won't issue them before you buy. If you want to gut the kitchen and rearrange its footprint, know you'll need board approval. Be prepared to live with it in case your plan eventually is denied.

9. Don't forget to ask about the pet policy.

Before buying into a co-op, it would be wise to consult with a real estate attorney to go over the terms of the contract. You don't want any unpleasant surprises down the road.

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