Issues buying a co-op with Sponsor Apartments

You probably don't realize it if you are new to the coop world of nyc, but many if not most coops have at least one or more sponsor units that are rented. If the apt building went coop in the 1970s onward, there's a good chance there are still a handful of sponsor units. All that would concern me is if it were over a certain percentage and the sponsor retained control of the board. In an established coop, that is unlikely to be the case. I wouldn't feel very comfortable with anything over 20% or so. But again, in established coops these tend to be units rented to a now aging population and units that will be sold as soon as the older people vacate the units in most cases. In GV, for example, the sponsor units I know of in coops are invariably occupied by people in their 70s, 80s and even 90s.

Are you worried about riff raff buying million dollar properties? Why would a sponsor buyer not share a similar "economic interest"?

AS Kyle alluded, most of the tenants still remaining in apartments are the holdovers from the 70s. They tend to be very sweet elderly folks. In our coop we have a few and they are assets to our community. We all watch over them and help them. They won't be here for long. Definitely only less than 10% of our coop.

What kylewest said. There aren't that many 100%-sold co-ops.

My own converted in the early '90s with a bit more than 50% sold, and is now at 22% of shares still owned by the sponsor. A few are ... vacated and sold each year, and the sponsor's done much better overall with the post-conversion sales than on the initial 50%.

No issues at all with the tenants. Couldn't even tell you who's who.

I also like the old folk. No downside in my personal experience. But there's also an economic plus. When one of their apt's is vacated and sold, one of two things happen: (1) the sponsor renovates since the units are usually in abysmal condition after 40 years of tenancy and little updating; the price garnered for the renovated unit is typically quite decent and then only helps the building comps; (2) the sponsor sells an estate-quality unit that a new buyer will renovate and improve which means when the new owner sells the unit will enhance building comps. In the short-term option #2 may create low building comparable sale figure, but it would easily be explained. I feel like the 10-20% such units in my building will in the next 10 years create a good situation for sales here. I'm in for the longer run (10 years+ I think) so I saw no downside to the rental tenants.

How many incidents of "inheritence" have you seen? I think most people (decent) people will happily accomodate seniors whose residence pre-dates conversion. But what happens if their heirs try to move in and assume RC/RS status (which has to be done at least two years before the original tenant "vacates")?

so what? that's the sponsors problem not the other owners.

"that's the sponsors problem not the other owners."

Um, NO.

Most sponsors don't live in the building, but other owners DO ... and they're the ones who have to deal with a potential problem tenant who happens to be the son of that sweet old lady who HAD been living in the unit since 1951.

lizyank, I asked our sponsor about RC/RS inheritance when it came up here a few months back. He said he can't figure why, but so far none of the 20-odd RC/RS tenants have had a relative move in and establish residency. If they did, he'd of course put them through the wringer to prove it was legit.

I guess, from the young relative's perspective, taking care of Grandpa for a couple of years could turn into 10 or 15, so best not to chance it.

so why is the younger relative instantly a problem tenant? because they want to tip the staff?

>>most of the tenants still remaining in apartments are the holdovers from the 70s. They tend to be very sweet elderly folks. In our coop we have a few and they are assets to our community.<<

Not always. I own in a co-op that is rife with wacky 'holdovers'. One woman, who lives in a small studio on my hall, has packed so much junk into her apartment she could have her own episode on A&E's Hoarders. She's prone to bringing home rescued pigeons and keeping them in a box in her rarely-used bathtub where they and the resident mice scuffle over birdseed and crumbs. Another person, also on my floor, had created a warren for himself out of newspapers and magazines--another Hoarders contender. Eventually his family removed him to a home. There are other similar types elsewhere in the building.

These folks, 'sweet' as they may be, pose a very real problem to the other tenants, and put the building at risk (fire, infestation) yet there is nothing that can be done to remove them until they die or their families put them into nursing homes.

and you think that people don't have problems with other owners?

"and you think that people don't have problems with other owners?"

There is a mechanism in place for removing problem owners.

Not so with RS/RC tenants.

matt: how many problem owners are removed? you are getting more and more ridiculous.

tell me again how yahoo wasn't the dominant force in on line search when google got started.

vevide, in my co-op, the sponsor must sell when a rented apartment becomes empty.

Actually Squid, that isn't true. If a tenant is creating an unsafe living condition, there are code enforcement procedures that can be pursued. If it is an elderly person, and their mind is going, there is the Dept of Mental Hygiene and the elderly social service agencies that can be called in.

In my experience, compassion has ruled the day and the building sort of banded together to help a nutsy 90 year old who had lived there for 50 years rather than have her displaced and taken away (which could have been done). It isn't always all just business.

I would imagine that the reason more people don't choose to "inherit" RC apartments relatives have lived in forever is that they prefer not to live somewhere that has not been updated/upgraded since the 1940s (if then), no matter how cheap. I am not among those who believe that renters are inheriently less desireable/responsible than owners but I would question if the agenda of someone who is playing the system for cheap rent is the same as those of us who have have made signficant investments in our homes and those long-time renters who have "invested" most of their lives in the building.

My mother lived in her building 70 years as an RC tenant--the last few with yours truly as the evil landlord. While I don't think she was ever a "problem" tenant...the "young" people in the building and especially on her floor were a critical, if informal, element of what allowed her stay independent until the end. Her neighbors (and the super) were wonderfully supportive and solicitious and gave me great peace of mind when was travelling or otherwise distracted with work.

>>Actually Squid, that isn't true. If a tenant is creating an unsafe living condition, there are code enforcement procedures that can be pursued.<<

That may be true, but even the code procedures are difficult to enforce. In the case of the above-mentioned pigeon lady/hoarder there were several attempts made by the co-op to relocate her, due to the unlivable and unsanitary conditions in her apartment, all to no avail. And before everyone jumps on me for being cold-hearted, I was one of three people who was friendly with her and tried to help her clean her apartment so she wouldn't be evicted. She's still there, as is her junk.