Co-op-Condo Comparisons

	A	B	D	E	F
1	Category	Sub-Category	Brookfield	Guterman-Westwood	Comment
2

3	Specific to Sponsor Plans
4	General	Price per sq ft	420*	315	*A guess. Waiting for Brookfield
5		Length of Sponsor Involvement	Long Term	Short Term	Confirmed
6		Impact of Sponser Length of Involvement	??	??	TBD
7		Effect on Rental Units	Equal, non-eviction	Equal, non-eviction	Confirmed
8		Effect on Open Spaces	Equal, no development	Equal, no development	Confirmed
9		Character of the complex	???	???	Maybe drop this. The plan that enables the greatest number of current tenants is by is the plan that will probably keep this area middle class the longest.
10		Commercial space	Assume Brookfield will own	G-W will own	Waiting for Brookfield
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12	Selling	Restrictions - Flip Tax	TBD but there will be a flip tax	None	Waiting for Brookfield
13		Restrictions - Other?		No selling in first year? 2 years?
14	Applicable to Co-op & Condos in general		Condo	Co-op
15	Time	Time to go in effect	Will take longer. 9-months to a year at the least; possibly much longer.	Would take the least amount of time.	Confirmed I've found no difference with respect to tax lot creation per se. However, for condos a survey for each unit must be filed with the Dept of Buildings. That means each unit must be measured & these measurements must be linked to their proper tax lots. That's 11,232 measurements & forms that need to be properly filled out, review, fixed if needed, resubmitted and approved. This is not required in the case of a co-op.
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17	Financing	Options available	Equal in NYC	Equal in NYC	Confirmed
18		Likelihood to obtain	Equal in NYC	Equal in NYC	Confirmed
19		Downpayment %	5%-10% fairly standard could be as high as 20% Low as 3.5% for FHA loans	Unit Shares Loan: 10% standard could be as high as 20% Co-op mortgage: none req'd	Confirmed. However, important to know that the amount down will be specified in the sponsors plan so if a lender is willing to lend at 10% down but the plan says 20% must be put down, the plan will prevail.
20		Size of Downpayment	More when interest rates are for both co-op & condo are equal or fairly close	Less when interest rates are for both co-op & condo are equal or fairly close	Confirmed. The fact that buyers are putting no money down for the co-op's unerlying mortgage accounts for the difference.
21		Amount of Interest to be paid	Right now rates are around 3.7% with 0 points	Unit Shares Loan: same as condo For Underlying Co-op Mortgage: 'more' or 'less' depending on plan	Confirmed
22		Closing Costs See Closing Cost Tab)	Much More	Much Less	Confirmed
23		Term(s) of the Mortgage(s)	30 yr fixed	Co-op Mortgage: <30 yrs (?) Unit Shares Mortgage: 30 yr fixed	Confirmed (will also speak to lenders)
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25	Monthly Payments	Mortgage(s)
26		Maintenance & Taxes	Operation Costs equal	Operation costs equal	Confirmed
27			Taxes equal	Taxes equal	Confirmed
28		Enforcement of Payments	No leverage	Some leverage	Confirmed In a co-op, if a purchaser defaults on maintenance payments, the co-op can evict the tenant under the proprietary lease, which initiates a default under the share loan agreement triggering a foreclosure on the shares by the lender. Once shares are foreclosed on by a lender, to preserve its collateral, the lender is incented to pay the maintenance on the unit lest it loses its collateral to the co-op corporation itself which can repossess. (Maintenance is a higher priority than any other obligation in a bankruptcy or foreclosure sale of co-op shares. Before the lender to a defaulting individual is paid back its principal, all back maintenace must be funded to the co-op corporation.)
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30	Defaults	Overall Failure	Seems to be very rare. If there is an overall bankruptcy, looks as if condos reorganize & come out of it. No public record stats.	There are currently 3,623 co-op properties in Manhattan. In Manhattan for the 19 year period since 1993 there have been 94 co-op property defaults. Seems to be very rare in the case of large co-ops. Seems to be more frequent in the case of very small co-ops…2 or 3 units. .	Checking. Stats and info from NYU Furman Center.
31		Of Sponsor-Likelihood	It can happen. It is not very likely.	It can happen. Not very likely especially in large complexes.	Checking.
32		Of Sponsor-Impact	If a sponsor defaults, individual unit owners are untouched. That is, they will still own their units. However, maintenance of the common areas will suffer. The grounds & play areas may suffer. Buildings may not be cleaned; garbage collection might suffer.	If a sponsor defaults, the entire corporation might go into bankruptcy.	Confirmed. There are different impacts. In the beginning the sponsor or a non-profit agency (depending on the plan) will own a great many of the apartments. The question is: what happens if the sponsor/agency can't meet maintenance obligations.
33		Of Participant - Likelihood	From 1993 there have been 5805 condo unit defaults.	There are no stats on co-op unit defaults but with 94 overall defaults since 1993…if indeed most of these are small, the number of unit defaults at most would be between 1000-2000.	Checking. Stats and info from NYU Furman Center.
34		Of Participant - Impact	Condominium association dues, common area charges, etc., are the responsibility of all tenants, and if they go unpaid by individual condominium owners, the condo association will have to raise assessments on those who are paying - or go bankrupt.	In a co-op, if a purchaser defaults on maintenance payments, the co-op can evict the tenant under the proprietary lease, which initiates a default under the share loan agreement triggering a foreclosure on the shares by the lender. See Comment under Enforcement of Payments	Confirmed. For defaults that occur in small numbers, seems like the advantage goes to co-op here. However, if the defaults are in large numbers, the impact is greater on co-op.
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36	Tax Deductions	Amount	Same	Same	Confirmed
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38	Common Property	Land, lobby, hallways, stairs, roads, systems (heat, electrical, internal pipes), etc.	Condominium owners own their apartment as real estate and have an undivided interest in the common areas of the complex.	All real estate is owned by the co-op corporation in which the tenants hold shares and a proprietary lease giving them rights to occupy their apartment.	Confirmed.
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40	Capital Improvements	Borrowing	Difficult - so many separate units	Easy - can borrow as single entity	Confirmed
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42	Property Management		A managing agent is usually hired. Often the sponsor becomes the managing agent for a fee.	A managing agent is usually hired by the corporation/board of directors	Confirmed.
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44	Governance	Usual structures	Board of Directors	Board of Managers	Checking. Not aware of any differences now.
45		General Nature of Rules	Bylaws must be spelled out in the offering plan	Bylaws must be spelled out in the offering plan	Confimed. Dependent on what is specified in the sponsor's plan
46		Enforcement	Less power to enforce.	More enforement capability due to protections under tenant multiple dwelling laws.	Confirmed.
47		Elections	Elected by the unit owners. The sponsor will own the majority of the units, will have the right to seat representatives in majority.	Elected by unit share owners. Not sure of the sponsors status here.	Checking. What is sponsor status in each case? Does the sponsor sit on the board & in what numbers? One blog comment raised a concern that a deal may have been worked out to seat TA Board members to represent Brookfield. Also, I'm told that by a sponsor can only hold a majority on the board for 5 yrs. After that, no matter what, majority control goes to the tenant-owners.
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49	Common Restrictions	New Buyers	Equal	Equal	Confirmed. All equal dependent on specifcations in the by-laws.
50		Subletting	Equal	Equal
51		Unit Renovations	Equal	Equal
52		Enforcement	Less strength	More strength	Confirmed. Under the law, co-op share holders are effectively both owners & renters; that is, in some legal sense they are renting from the co-op corporation. This means they are covered by multiple dwelling tenant laws. I believe this means that under some circumstances shareholders in egregious violation can be evicted. This is not the case with condos.
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54	Selling	Prices	Generally more	Generally less	Confirmed. The difference largely has to do with co-op restrictions. So perhaps this category becomes equal if a co-op's bylaws have few restrictions.
55		Profit	Less	More	My calculations show that in our particualr case the difference in price combined with the difference in expenses make the co-op significantly more profitable.
56		Ease of Selling	???	???	Checking. This is probably too dependent on market conditions & might be taken off the sheet entirely.
57		Price Stability	Prices tend to go up more or down more with the market	More stable	Checking
58		Transfer Taxes	Higher	Lower	Checking
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60	Stability	Length of ownership	Historically shorter	Longer	Checking. Read this on the internet
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