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Glossary

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Amenities: Luxury staff and services that benefit residents in the building. Can include a doorman, concierge, valet service, fitness center, gym, pool, garage, laundry facilities, storage, library and many other features and services.

Assessment: A tax or special payment due to a municipality or association. In New York, an assessment can als be temporarily added to your monthly maintenance or common charges by the co-op or condo board in order to pay for renovations, capital improvements or to bulk up the reserve fund.

Attended Elevator: See "Elevator Operator".

Balcony: A private, outdoor space connected to an apartment used exclusively by the owner. Balconies tend to be smaller than terraces. The two terms are often used interchangeably in New York.

Board Package: Often the size of a phone book, the board package presents a complete "picture" of the prospective buyer to the co-op board on paper. It contains all financial statements, letters of recommendation, etc. Only after a co-op board reviews an applicant's package will they consider granting them an in-person interview.

Common Area: Public areas in a building that are shared by all residents. These areas include the lobby, elevators, common outdoor space, health club, laundry facilities, etc.

Common Charges: A payment from all building residents to cover the overall building expenses, such as staff salaries (doormen, super, etc.,) heat and hot water, insurance, repairs and maintenance. The condo common charge does not include real estate tax, as each apartment in a condominium receives its own tax bill.

Concierge: Much like a hotel concierge, the concierge in an apartment building can be found in the lobby and is the go-to person for common needs, such as accepting packages, greeting visitors, hailing taxis, making reservations, etc.

Condo (Condominium): Buying a condominium (condo) is very similar to buying a house. When you buy a condo you are buying real property, for which you receive a deed. When you buy a condo, you own the apartment and a percentage of the common areas, such as the lobby, elevators and hallways. (For more information see FAQ's)

Condo Association: A group of apartment owners elected each year by all residents of the condo building. The condo association is responsible for protecting and enhancing the value of the building through managing the overall operations, finances and upkeep of the building.

Condop: A condop is a mix of a co-op and a condo. Condops are rare, but desirable because many condops have condo rules, meaning there is no board approval necessary to buy an apartment and subletting is often permitted. Condops are mostly used by developers and co-op boards to divide a commercial space, such as retail stores and/or a garage, from the co-op apartments in the building for legal purposes.

Co-op (Co-operative): The most common ownership structure for multi-unit apartment buildings in New York City. In a co-op or co-operative, you don’t actually own your apartment. You don’t own the walls, the ceiling, or the floor. You own shares. In co-ops, the apartment corporation owns the building and you own shares in the corporation. When you purchase a co-op, you receive a stock certificate, not a deed. The larger your apartment, the more shares in the corporation you own. In New York, the majority (85 percent) of all apartments available for sale are co-ops. (For more information see FAQ's)

Co-op Board: Like most corporations, a co-op has a board of directors, commonly known as a co-op board. They are made up of a group of apartment owners elected each year by all residents of the co-op building. They manage the overall operations, finances and upkeep of the building. One of the most important, and controversial, functions of a co-op board, is to be the building's gatekeeper, deciding who can and cannot live in the building.

Conversion: A change in how an existing building is used. For example, in Manhattan it is common for old warehouses to be converted into lofts, single family townhouses to be converted into multi-family townhouses or commercial space to be converted into residential space.

Down Payment: The amount of money a buyer is required to pay out of pocket in order to purchase a co-op or a condo, usually a percentage of the total price of the apartment. Condos generally require a 10% down payment. Most co-ops, however, require a minimum down payment of 20 to 25 percent of the purchase price, allowing the remaining 80 to 85 percent to be financed with a mortgage. Some co-ops, however, require larger down payments of 25, 50 or 75 percent of the purchase price. Many exclusive co-ops on Park Avenue, Fifth Avenue and Central Park West, for example, require buyers to pay up to 100 percent of the price of the apartment in cash.

Elevator Operator: Many elevators in New York's older buildings, especially pre-war buildings, still need to be operated manually by an elevator operator. To have a full-time elevator operator is considered a luxury as well as added security in places like Park Avenue, Fifth Avenue and Central Park West

Employment History: Most co-op boards expect a buyer to be employed, regardless of their net worth and even if the apartment is bought with cash. Co-op boards also take into consideration the company for which a buyer is employed, the length of employment, and position in the company.

Financial Statements: In general, these are the last three to six months of all bank statements, credit reports, retirement funds, as well as the last two to five years of tax returns. When buying a co-op, the board wants to know your complete financial worth. Your financial statements gives them a complete and comprehensive picture of your assets and liabilites.

Financing Permitted: Most co-op boards or condo associations allow you to buy an apartment in their building with the help of a mortgage. For example, most co-ops require a minimum down payment of 20 to 25 percent of the purchase price. The remaining 80 percent can be financed with a mortgage. Some co-ops, however, require larger down payments of 25, 50 or 75 percent of the purchase price. In many exclusive co-ops on Park Avenue, Fifth Avenue and Central Park West, financing is not permitted and buyers are required to pay for 100 percent of the apartment in cash. .

Flip Tax: Unique to co-ops, this is not actually a tax, but an “exit fee” imposed by the co-op board to make the building more financially stable. The flip tax goes into the building’s “common fund” along with maintenance fees to cover building expenses. The flip tax is paid by the apartment buyer or seller at the closing and is usually a percentage of the purchase price. Not all co-ops have a flip tax.

G - H

Gifts or Gifting: The act of giving money so the buyer has enough to purchase an apartment. A gift is usually given by a family member, friend or partner. Most New York co-op boards do not allow gifts or, at the very least, frown on this practice. It means the buyer is not financially ready to purchase an apartment on his or her own.

Grandfather Clause: This allows certain residents of a co-op or condo to be exempt from a change of law in the building. The most common examples are whether pets or washers and dryers are allowed in apartments. When these laws change, only those who already have pets and/or washers and dryers may keep them – no one else may have them. These pets and washers and dryers are now "grandfathered in” and are exempt from the new law. The grandfather clause can sometimes be carried over to new owners. This is called an "exemption" from the new law.

I - K

Income Requirements: At a minimum, most co-ops insist monthly maintenance and mortgage payments not exceed 28 to 32 percent of a buyer’s gross income. Needless to say, many co-ops require more than the minimum. Furthermore, co-op boards do not generally consider income from self-employed buyers or buyers who derive the majority of their income from bonuses unless the income has been consistent for several years. Co-op boards also take into consideration the company for which a buyer is employed, the length of employment, and position in the company. Most co-op boards expect a buyer to be employed, regardless of their net worth and even if the apartment is bought with cash. See "Employment History".

Keyed Elevator: A type of elevator that either opens directly into an apartment, which occupies the entire floor of the apartment building, or opens into a foyer which leads directly to the apartment. This type of elevator can be seen in loft spaces or in high-end apartments where one must use a key to gain access to the penthouse apartment.

Letters of Recommendation: Letters from people who know you personnally and professionally and can describe who you are as a person, what you are like, and can vouch for your character. Co-op boards require that you submit several letters of recommendation when applying to their building. Typically, boards require three personal letters of recommendation, three professional letters of recommendation, one letter from your current employer and one letter from your bank or other financial institution. When trying to choose whom to ask to write your personal and professional letters of recommendation, the rule of thumb is to choose the most accomplished people, employed in the most distinguished professions and companies. It is very helpful to get letters from people who have served on a co-op board at some point or who have lived in a co-op building. If you are applying to a very exclusive co-op, such as on Park or Fifth Avenue, it is recommended that you ask anyone who has also lived in an equally exclusive co-op, on an equally exclusive street or neighborhood, to write you a letter of recommendation.

Liquid Assets: Includes cash, cash in the bank, stocks, bonds, mutual funds, promissory notes and mortgages which are payable to the applicant, and certificates of deposit. Note: Retirement funds (IRA's, 401K's, etc.) are not considered a liquid asset.

Liquid Assets After Closing: The amount of liquid assets (cash, stocks, bonds, etc.) you must have after the purchase of a co-op apartment. Typically you must have enough to pay multiple monthly mortgage and maintenance payments - 24 months is typical. However, more exclusive buildings require much larger amounts of liquid assets after closing. Many buildings on Park & Fifth Avenue, for example, require a buyer to have two to five times the price of the apartment in liquid assets after closing.

Loft: An open living space converted from commercial space to residential space. Lofts contain very high ceilings, large windows and an open floor plan - there are often no walls to divide the rooms from each other. In New York City, most lofts and converted commercial spaces are located downtown.

M - O

Maintenance: The maintenance fee in a co-op covers the overall building expenses, such as staff salaries, (doormen, super, etc.,) heat and hot water, insurance, repairs and maintenance, the underlying mortgage of the building, as well as real estate taxes. Portions of the monthly maintenance fees are tax deductible due to the building’s underlying mortgage interest. Shareholders can also deduct their portion of the building’s real estate taxes.

Managing Agent: An independent company that manages the co-op or a condo property. These firms are responsible for the daily maintenance of the property, the collection of rents and monthly maintenance charges, enforcing building policies, processing the board applications of prospective buyers, etc.

No Board Approval: A minority of New York co-op and most condo buildings do not require prospective buyers put together a board package or go through a board interview. There are also other situations where prospective buyers or renters do not have to go through this process either. One is when the buyer purchases in a Condop building (See "Condop") Another is when the apartment is being sold by the "sponsor." (See "Sponsor").

Parents Buying for Children: Some co-op boards allow parents to buy an apartment for their children. However, most require that the person living in the apartment be financially independent.

Pied-A-Terre: A French term that refers to an apartment that is not the primary residence of the owner. A pied-a-terre is used whenever the owner comes into town - it can be used several months at a time, or only a few weeks a year. Many co-op boards in Manhattan do not permit pied-a-terres.

Pet Policy: The rules and regulations a co-op or condo building has regarding pets. Each apartment building has its own pet policy. Some buildings have liberal pet policies and some have rules as to how many and what kinds of pets you can have. Examples of pet policies include: No dogs, weight limits on dogs, no pets on sublets, board interviews of pets or pets by written permission of the board.

Proprietary Lease: A written lease held by a co-op apartment owner/shareholder, giving them the right to occupy their unit. Buyers of a co-op apartment receive two proofs of ownership and occupancy - a stock certificate and a proprietary lease.

Q - R

Recommendation Letters: See "Letters of Recommendation".

Renting a Co-op: See "Subletting".

Reserve Fund: A bank account with monies designated for the upkeep of the building, including renovations, capital improvements as well as everyday operating expenses such as staff salaries, etc. Each co-operative and condominium maintains a reserve fund.

Shares: What you own when buying a co-op apartment. In a co-op you are not buying real property, you are buying shares in a corporation, for which you receive a stock certificate. The bigger your apartment, the more shares in the corporation you own.

Sponsor: The original developer who built the building or who converted the the building to a co-op. They often hold on to one or more apartments as an investment, rent them out and eventually sell them.

Sponsor Unit: Apartments that are held as an investment by the sponsor - the original develeper who built the building or converted the the building to a co-op. Sponsor apartments are usually exempt from board approval.

Subletting: When the owner of a co-op or condo apartment rents the property to another tenant for a period of time. Renting or subletting an apartment in a co-op can be very difficult. Most co-op boards are not "investor friendly," meaning they forbid investors from buying apartments to rent for investment income. Co-ops ideally want owner-occupied apartments in the building. The prevailing wisdom is that owners take better care of their apartment and the building than renters do. Some co-ops permit subletting under special circumstances, the most common being that an apartment owner is under "duress". An example of duress is being relocated out of the state or country by your employer. Even under duress, most co-ops will only allow owners to sublet for a limited time, usually two or three years, after which time the owner must move back in or sell the apartment. Each co-op has a different sublet policy that should be reviewed carefully.

T - Z

Tax Abatement: A tax break offered by the city to developers of residential property and passed along to the end buyer. When you buy new or pre-construction property in Manhattan, you get a tax abatement for the first 10 years. This abatement can bring your tax bill from several hundreds or thousands of dollars a month to just a few dollars a month for the first several years. During the abatement period, the monthly taxes increase 20 percent every two years until the 10th year.

Tax Deductibility: The amount or percentage each individual owner/shareholder is allowed to deduct from their personal taxes each year. The percentage represents each shareholders proportionate share of the building's underlying mortgage and the New York City real estate taxes paid that year.

Terrace: A roof or part of a roof in a building. In New York, terraces can be found when there is a setback on a high-rise. Terraces tend to be larger than balconies. The two terms are often used interchangeably in New York.