NYC Coop Closing Costs Explained
The key to understanding coops is to understand that the building itself is a registered corporation that sells shares of ownership to individual unit owners, and the amount of shares are appropriated to each unit based on square footage.
Coop loans since their inception were booked by banks as Business Loans. Leans were filed through Uniformed Commercial Code, much like a lean on any corporation that borrowed money from a bank. Even though secondary mortgage markets now recognize coop loans as home mortgages, the lending principals for coops remained the same, therefore making them exempt from many insurance and tax requirements.
An average buyer’s coop closing costs break down as follows:
- Buyer’s Attorney: $1650
- Coop’s Transfer Agent: $750
- Credit Check: $100
- If using a Mortgage add:
- Application Fee: $650
- Appraisal fee: $375-750 depending on property size
- Bank’s Attorney: $750
- Recognition Agreement Preparation: $100
- UCC1 Lean Filing Fee: $100
- Lean Searches: $300
This estimate leads us to an expected $5000 in closing costs.
NOTE: any property sold in the city of NY over $1 million dollars is subject to 1% Mansion Tax. Be sure to factor it into your budget if your purchase price exceeds $1 million. Additionally any discount points you CHOOSE to pay your lender in effort to reduce your effective borrowing rate will add to the overall expense. Fees vary from one lender to the next. Be sure to request a Good Faith Estimate from your lender to get and understanding of their fees.