Sponsor unit in co-op

No board approval needed.

No disadvantages I can think of.

Buyer usually pays the taxes (a bit less than 2%) that the seller would, so remember them when negotiating.

I saw a few sponsor units and the disadvantage that I can think of is that they are renovated by the sponsor who may not have wanted to put much money into the renovation. They are often very basic renovations and you may want something a little nicer so factor in the costs of additional renovations that you will want when figuring out the total cost of the apartment to you in the long run.

Buyer pays the transfer tax... and also pays the tax when they decide to sell. double taxed

Years ago, sponsor units were cheaper than regular units, because no one wanted a sponsor's (presumably) lower level of renovation. Now, they're more expensive, because buyers are so scared of the board process. But IMHO, buyers overpay for the privilege of not going through the board.

ali r.
DG Neary Realty

Is board approval needed to sublet a sponsor unit?

Can the buyer of a unit from a sponsor inherit any rights that are different from other co-op unit owners or will the buyer now come under the regulations of the co-op board in its entirety?
Thanks

it depends on what is written into the offering plan. most of the time, you become like other unit owners. in rare instances, the offering plan allows an investor to purchase bulk and retain sponsor privileges.

It's not the regulations of the co-op board, but rather it's the terms of the proprietary lease. Yes, new owner is now governed by the terms of the proprietary lease. New owner must also live by house rules, etc.

ab_11218 :

Thanks for the input. I have a question for you.
How does one go about finding out about the offering plan and determining if sponsor privileges can be retained?

>>Can the buyer of a unit from a sponsor inherit any rights that are different from other co-op unit owners or will the buyer now come under the regulations of the co-op board in its entirety?<<

If the buyer plans to rent out the unit he can try to negotiate 'sponsor rights' as part of the deal. Meaning he would not be bound by co-op's sublet policy and his renters would not need to be vetted by the board. If, however, he were ever to decide to occupy the apartment himself the sponsor rights would become null.

it would be in the offering plan

Bramstar,

How would I go about negotiating "sponsor rights"? I actually want to buy the unit to rent to my son who is starting a new job in the city. So, I will NOT be staying in the unit myself and don't ever intend to stay in it. I like living in the country and the quiet lifestyle. Also, is there an attorney who you can recommend who will be able to help in this transaction? Thanks

Bobnay--

I don't know that plans to rent to a family member would qualify you for sponsor rights, though that is an interesting question...

Our attorney is a family member--don't know that he's taking on additional jobs. But would be happy to check. There are lots of attorney recs that fly around on this board so someone will probably have a good suggestion for you.

check proprietary lease - if it indicates that purchaser "or" immediate family can reside there, you should be fine; if it says purchase "and" immediate family, you have an issue. And speak with an attorney.

>Now, they're more expensive, because buyers are so scared of the board process. But IMHO, buyers overpay for the privilege of not going through the board. <

totally agree, FP. 'Sponsor Unit' now means pay a premium for bypassing the Bd.

>>check proprietary lease - if it indicates that purchaser "or" immediate family can reside there, you should be fine; if it says purchase "and" immediate family, you have an issue. And speak with an attorney.>>

Purchaser cannot occupy if buying with sponsor rights.

Bramstar, correct. Neither the Holder of Unsold Shares nor any of her immediate family can occupy. Also, the sponsor is on the hook if a HUS defaults, among other conditions, so no reason a sponsor would want to enter into that relationship as opposed to just selling the place as usual.

That's how most governing docs cover it. (I'd say "all", but that'd be a SE no-no.) There've been lots of court cases over shareholders trying unsuccessfully to assert HUS rights, so it's all pretty cut and dried.

A parent buying for a child is another story. Some co-ops have no problem with that.