Fernando Branco, Principal Broker
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Fernando Branco Realty - 162 Huntington St, Brooklyn NY 11231
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REBNY Legal Line Question of the Week: Square Footage Disclosure in Co-ops and Condominiums
QUESTION; I have noticed that many co-op listings do not include a square footage estimate but condominium listings do. Why do real estate brokers disclose the estimated square footage of a condominium unit but not a co-op unit?
ANSWER: There are a number of reasons why square footage is generally disclosed in condominium transactions but not in co-op transactions.
First, there is little data on file with New York City regarding the actual square footage of co-ops. Many co-ops in New York City were built before square footage was calculated and, in the 1980s, when many buildings were converted into co-ops, square footage was not required to be included in the offering plan. On the other hand, for condominiums, square footage is listed in the condominium’s original offering plan. This provides an authoritative reference for determining a condominium’s size.
Second, the calculations of co-op square footage that exist are frequently inaccurate. This is because, in New York City, there is no generally agreed upon method for calculating square feet. For example, while some developers include hallways, foyers, bathrooms, and unusable floor space in their calculation, others will not. Moreover, according to REBNY, "many Manhattan apartments, including pre-war buildings, often have hard-to-measure elements like oddly shaped rooms, removed walls, or even turrets or alcoves."
A final explanation is the difference in the type of ownership of a co-op versus a condominium. In condominium ownership, the unit owner owns real property and, accordingly, pays real property taxes that are based on the square footage of the condominium unit. However, in a co-op, the co-op shareholder does not own real property (the co-op shareholder owns shares in the co-op corporation). Thus, instead of real property taxes, the co-op shareholder pays maintenance fees to the co-op corporation based on the number of shares the co-op shareholder owns. The co-op corporation uses those maintenance fees, in part, to pay the entire building’s real property taxes (there are no real estate taxes allocated to each individual co-op unit). Consequently, for tax purposes, the square footage of the individual co-op unit is of less importance.
Important Tip: When providing square footage for any property, Brokers must make it clear that their square footage numbers are only estimates. If a potential purchaser or tenant is concerned about the square footage of the property, Brokers should suggest that the purchaser or tenant engage a professional to assist them in calculating and understanding the methodology of calculating square footage. Failure to provide this disclosure may place Brokers at risk for liability if the square footage is not accurate.
BY: Neil B. Garfinkel, REBNY Broker Counsel Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP
April Market Reports: 3 Important Takeaways to Share With Your Clients May 30, 2019 OVER 1,000 MANHATTAN HOMES ENTERED CONTRACT IN APRIL. According to the StreetEasy April 2019 Market Reports, the New York City sales market may be strengthening. This news comes after months of weakening prices across the city, rising share of price cuts and growing days on market. Read on for three takeaways from our most recent report that will offer you and your seller encouraging signs. Nearly 1,200 Homes Entered Contract in Manhattan This April The context: The number of pending sales in Manhattan rose by 26.6% year-over-year to 1,193 in April. That marks an annual increase of more than 250 and the most homes to enter contract since 2015. Upper Manhattan saw a lot of contact activity with pending sales doubling to 132 from 66 the year before. Washington Heights and Central Harlem led the charge with 53 and 29 homes entering contract, up by 104% and 53%, respectively. The takeaway: M
A design revolution in New York City is taking place, as the Chelsea neighborhood transforms from a derelict wasteland to a thriving nexus of art and architecture. The Hotel Americano, the first U.S. outpost of the splashy Mexican hotel chain Grupo Habita, recently materialized on Manhattan’s West 27th Street. It’s situated between 10th and 11th Avenues, at the northern frontier of the Chelsea art district, in the middle of a block best known for its cacophonous, warehouse-scale nightclubs. Why, you might wonder, would anyone want to build a hotel here? But the unpromising appearance of the location is part of the allure. “It’s gritty,” says owner Carlos Couturier, “and I like that grittiness. It feels like what the Meatpacking District was ten years ago. Very authentic.” Yes, Way-West-27th is authentic—some of the nearest residents are in a cluster of city-owned housing projects—but here, as elsewhere in Manhattan, grit is an endangered species. Just down the block from the
Legal Line Question of the Week - REBNY Transfer Taxes and Grossed up Consideration I represent the prospective purchaser of a new construction condominium unit. In speaking with the sales office for the sponsor, I was informed that my purchaser is responsible for paying both the New York City and New York State transfer taxes. I thought that the obligation to pay transfer taxes was the r esponsibility of the seller. Can you please explain? Generally, when real property (or a co-op apartment) is sold in New York City, the seller is responsible for paying both the New York State and New York City transfer taxes. In residential real estate transactions where the purchase price is greater than $500,000, the New York City transfer tax equals 1.425% of the purchase price (and where the purchase price is $500,000 or below, the New York City transfer tax is 1% of the purchase price). The New York State transfer tax is .4% of the purchase price. New Yo