Condop?

Most condops are structured that way because the building wants to be a condo, but doesn't own the underlying land. So you just need to check the building's lease of the underlying land -- the "ground lease" -- to make sure that you're comfortably with how long it runs for -= and that your bank is too.

Other than that, there shouldn't be any problems.

ali r.
DG Neary Realty

I am not sure that that is the primary reason behind use of a "condop" structure. In some co-ops, the condop structure was set up to separate the commercial from residential units. Sponsors used it to keep control of the commercial space.

I live in a Condop. It is the "best of both worlds" You get all the advantages of a Co-op, No Mortgage recording tax ( half the closings costs of a Condo), and a higher tax deduction (you get to deduct the interest on the mortgage of the building) Condo advantages, no board approval, no subletting restrictions, investor and pied-a-terre friendly.

Thanks for the comments!

10023 -- that's true, keeping the commercial units separate is another possibility for a condop structure, but in that case a potential purchaser might not see the no board approval/no subletting restrictions this purchaser is seeing.

ali r.
DG Neary Realty

We're talking about the two different definitions of "condop".

One is a co-op with condo-like rules. Any co-op can become that kind of condop by just amending its bylaws.

Two is a co-op that either owns or leases a large multi-apartment condo unit, and can have coop-like or condo-like bylaws. The same building would have one or more commercial units that'd be retained or sold by the sponsor.

Then you have situations like Chelsea Enclave, where the seminary turned its property into a condo and leases the residential unit to the co-op.

What NWT said.

Many of the co-op conversion along Amsterdam, Bway on the UWS are "condops" of the 2nd type.

Another question: I was given the condop's financial statement, but what should I check?

I am looking at some Condops with commercial condo space on the street level. Do all Condops have land leases or is it case-by case?

There is no discernable correlation between a cond-op structure and a land lease. I've seen examples of both. As others have noted above, many cond-ops are structured that way because the original sponsor wanted control of the ground floor commercial space, but the co-op owns its own land and building, and pays proportional common charges into the condo structure.

Bloomsday, it's pretty rare for a co-op to lease a condo unit. Usually it's where an institution owns the land but can't sell it, as at Chelsea Enclave. There, the seminary worked out a deal with the Brodskys to erect a building as a condo. The seminary owns all three units. It uses one for itself, leases one to the Brodskys for retail, and leases one to the co-op.

For yet another permutation, see http://streeteasy.com/nyc/building/33-east-70-street-new_york. There, a long-established co-op owned the land free and clear, but in 2006 turned it into a condo with two units, retail and residential. The co-op owns both units. It gives the co-op some flexibility in case it wants to sell the retail space outright instead of renting it out. It probably also had to do with an old IRS regulation limiting the amount of non-shareholder income a co-op could receive without losing favored tax status. That was a huge factor with their full blockfront of prime Madison Avenue retail space. That space now accounts for the shareholders paying tiny maintenance for huge apartments.

Soem of the new condops (ex. in Harlem) have commercial retail owned by the developer. None of the revenue goes back to the co-op above. This is part of many of the 421-A's.