3 years ago

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Full Blog Post: https://www.hauseit.com/co-op-maintenance-fees-negotiable-nyc/

Are Co-op Maintenance Fees Negotiable in NYC? We’ll demystify this topic in the following video.

I’m Nick at Hauseit. Check out our website https://www.hauseit.com to learn how to save up to 6% when selling and save up to 2% when buying here in New York City. So let’s get started!

Co-op monthly maintenance fees in NYC are not negotiable. The amount of monthly maintenance (and the rate and frequency of any increases) is set by each co-op’s Board of Managers and ultimately driven by a building’s cost of operations.

The specific monthly maintenance paid by an individual unit owner is determined by the number of shares assigned to a particular apartment relative to the total share count in the building. Co-op shares in a building are assigned to each unit based on a number of factors including square footage and which floor the apartment is on.

For example, a top floor apartment may be allocated 300 shares compared to only 75 shares for a smaller unit on the second floor. Both monthly maintenance and special assessments are allocated proportionally across individual co-op units in a building based on the number of shares owned.

Co-op maintenance fees for similar apartments in different buildings can vary widely. This is because each co-op building has its own unique finances, streams of income and associated operating costs. A co-op building’s cost of operations includes: real estate taxes, building repairs and maintenance, staff salaries, utilities, insurance, management fees as well as any debt servicing or land lease payments.

In the case of land lease co-op buildings, it’s not uncommon to see monthly maintenance figures which are three or more times higher than for a comparable apartment in the neighborhood. That being said, co-op apartments with higher monthly maintenance typically trade at a discount compared to apartments with more reasonable maintenance figures.

A lower purchase price and correspondingly smaller mortgage payment may offset some or all of a higher maintenance figure. A savvy purchaser may utilize a discounted cash flow analysis to compare a less expensive co-op with higher monthly maintenance to a pricier apartment with lower maintenance.

While co-op maintenance fees and assessments are not negotiable from the perspective of a unit owner, it may be possible as a buyer to negotiate with a seller and ask them to cover some or all of any ongoing or upcoming assessment.

If you’re thinking of buying a co-op but you’re concerned about high maintenance, just remember one thing: monthly maintenance only goes in one direction:UP. All else equal, you should expect to be paying less money for an apartment with higher maintenance.

Before submitting an offer on a co-op with a high monthly maintenance figure, we suggest reviewing the building financials and requesting a 5 year maintenance history from the listing agent. Keep in mind that many of the largest expenses for a co-op building, such as real estate taxes, cannot be directly controlled by the building itself. However, reviewing the financials and the history of maintenance increases should give you a good sense of whether the building is responsibly managing its finances.

If you reach the accepted offer stage on a co-op apartment, your real estate attorney will, among other things, review the financials and co-op board meeting minutes as part of buyer due diligence which happens before you sign a purchase contract.

As a co-op share holder, you can indirectly influence future maintenance increases and the size of special assessments by voting for board members and/or serving on the co-op board directly. It may be easier to exert more influence in a smaller building, particularly if it is self-managed, since you’ll have easier access to board members.

In conclusion, co-op monthly maintenance fees in NYC are non-negotiable. Once they’re set by the board, co-op maintenance fees and assessments become the responsibility of each unit owner.

We hope you enjoyed this video, and if you did, please like, subscribe and leave us a comment. We’d greatly appreciate it. I’m Nick at Hauseit, and we’ll seen you on the next video!

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
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