Fernando Branco, Real Estate 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
Manhattan’s 2016 Narrative – 5 Main Themes to Know 2016, the year of normalization… After five straight years of progressive reflation in Manhattan residential real estate (2010-2015), buyers finally saw the leverage pendulum swing their way. Of course, just how much leverage a buyer gained still heavily depends on the price point. What’s happening at the high end is drastically different than what’s happening at the lower end. Lets discuss before the firms Q4 market reports are released. Here are the 5 themes you need to know about Manhattan’s 2016: Read more...
February 18, 2016 Q: I am a licensed real estate salesperson and I am representing a purchaser who is considering a co-op apartment in a building that has a Ground Lease. Can you please clarify exactly what a Ground Lease is? Also, are there any particular considerations that should be made before purchasing a co-op apartment in a building that has a Ground Lease? A: If a co-op building has a Ground Lease (also known as a Land Lease) it means that the co-op corporation does not own the land under the building. Rather, the co-op corporation leases the land from the owner of the land. About 100 buildings in Manhattan have Ground Leases, many of which are co-ops. Generally the terms of Ground Leases are quite long, varying from terms of 50 to 99 years. Several important considerations should be made before purchasing a co-op apartment in a building with a Ground Lease: Can the rent payable by the co-op corporation increase during the term of the Ground Lease? If the re