Questions to Ask When Buying a Co-op
Questions for buyers of a co-op apartment, covering shares and maintenance, the building's underlying mortgage, reserves and assessments, flip tax, sublet and renovation rules, the board package, and what resale looks like.
20 questions, each with the reason to ask it · includes a conversation guide
The questions
Open any question to see why it works.
- 1
How many shares come with this apartment, and what is the monthly maintenance?
Maintenance is the share count multiplied by a per-share rate, so two similar apartments in one building can carry very different charges. Getting both numbers lets you compare this unit against its neighbors rather than against the asking price.
- 2
What percentage of maintenance is tax deductible this year?
A co-op passes through your share of the building's property tax and underlying mortgage interest, and the figure is restated annually. It is the number that makes a high maintenance comparable to a condo's common charge plus taxes.
- 3
Is there an underlying mortgage on the building, what is the balance, and when does it mature?
The building's own loan is paid out of maintenance and sits ahead of everything you own. A large balance maturing soon and refinanced at a higher rate is the most common reason maintenance jumps without any visible work being done.
- 4
How much is in the reserve fund, and what is it earmarked for?
Compare the balance against the capital work already scheduled: facade, elevator, roof, boiler, windows. Reserves held against a known repair cycle read very differently from the same balance with nothing planned.
- 5
Has there been an assessment in the last five years, and is one being discussed now?
Boards prefer assessments to maintenance increases because they read as temporary. Ask for the amounts and the end dates, and ask specifically whether any assessment was extended or quietly renewed when it was due to expire.
- 6
What does the board require financially: down payment, post-closing liquidity, debt-to-income ratio?
Many co-ops want twenty to twenty five percent down and one to two years of mortgage and maintenance still in the bank after closing. These are hard gates rather than guidelines, so learn them before you bid.
- 7
What goes into the board package, and how long does approval usually take?
Packages commonly run past a hundred pages: tax returns, bank statements, personal and professional reference letters, a financial statement. The timeline from accepted offer to interview is where a co-op differs most from a condo.
- 8
Has the board turned down buyers recently?
Boards are not required to give reasons, so what you want is a rough rejection rate and whether refusals cluster around anything: self-employed income, gift funds, or parents purchasing for a child.
- 9
What is the flip tax, how is it calculated, and who pays it?
A flip tax may be a percentage of the sale price, a per-share amount, or a slice of the profit, and it usually falls on the seller. That means it becomes your cost later, so it belongs in your holding period math now.
- 10
What are the sublet rules?
Some co-ops forbid subletting outright, and many allow it only after a period of residence and only for a couple of years out of five. If any part of your plan involves renting the apartment out, this rule decides the building for you.
- 11
Can I buy this as a second home, for a child, or through a trust?
Policies vary widely. Some boards require primary residence, some allow a parent to purchase with the child on the stock certificate, some permit trusts with conditions. Ask before you structure anything, because a change restarts approval.
- 12
What are the rules on renovation?
Alteration agreements, summer-only work windows, restrictions on putting wet rooms over dry ones, and required architect sign-off are all common. If you plan to gut the kitchen, these rules set your schedule and a good part of your cost.
- 13
How many units does the sponsor still own, and how many are rent regulated?
Heavy sponsor ownership makes some lenders reluctant, which shrinks the pool of buyers when you sell. Regulated units also affect the budget, since their contribution is capped while the building's costs are not.
- 14
What is the current ratio of owner-occupants to sublet apartments?
Once the sublet share climbs, lenders get cautious and so do future buyers. It also changes daily life in the building, since renters rarely attend meetings or care much about the hallway carpet.
- 15
Can I see two years of board minutes and the last two audited financial statements?
Minutes are the honest document. They record leaks, litigation, insurance renewals, staffing problems and arguments that never reach a listing. Have your attorney read both sets before you sign a contract.
- 16
Is the co-op involved in any litigation?
Ask in both directions: cases brought against the building and cases the building has brought against a contractor or a shareholder. Pending litigation can drain reserves and complicate financing for you and for your buyer later.
- 17
Does the building own the land it sits on, or is there a ground lease?
A land-lease co-op faces a rent reset at a future date that can multiply maintenance overnight. These buildings trade at a discount for that reason, and the reset year matters more to your decision than the price per square foot.
- 18
What staff does the building employ, and when does the current wage contract end?
Doorman, porter and superintendent costs dominate the budget of a small building, and contract cycles push maintenance up on a predictable schedule. The end date of the current agreement tells you when the next increase lands.
- 19
Which house rules would I find annoying?
Ask about washing machines in units, pets, overnight guests, package handling, noise hours, and whether the roof is usable. The specificity of the answer tells you the building's temperament, since these rules are enforced by neighbors.
- 20
If I had to sell in two years, what would that look like?
Co-ops resell more slowly than condos because every buyer must clear both the board and the financial requirements. A useful answer cites recent days on market for this building, not for the neighborhood.
Reading a co-op before you bid
Practical guidance for the conversation itself.
What you are actually buying
What you are actually buying
Shares and a lease, not real property
You buy shares in a corporation and receive a proprietary lease on a specific apartment. That structure is why a board can approve or reject your buyer, why financing rules are set by the building as well as by the bank, and why the corporation's own debts show up in what you pay every month.
Maintenance is not comparable across buildings
A high maintenance can be cheap if it covers taxes, heat, water, staff and an underlying mortgage that is nearly paid off. A low one can be expensive if reserves are thin and an assessment is coming. Rebuild the number from what it includes before you judge it.
The board sets your resale market
Financing limits, sublet restrictions and interview standards all narrow the group of people who can buy from you. A building with strict rules is often a calmer place to live and a slower place to sell, and both halves are true at the same time.
Documents to have your attorney read
Documents to have your attorney read
- Two years of audited financial statements, with attention to the underlying mortgage balance, maturity date and rate.
- The reserve balance set next to any engineer's report or capital plan.
- Two years of board minutes, read for leaks, litigation, insurance renewals and staff turnover.
- The proprietary lease and house rules, especially on subletting, pets and alterations.
- The offering plan and any amendments, which set out what the sponsor still owes the building.
- The current insurance certificate, including the master deductible.
The board package and interview
The board package and interview
- Start collecting reference letters early. They are the item that stalls packages, because busy people take weeks to write them.
- Present your finances plainly and consistently. Boards notice unexplained deposits and figures that differ between documents.
- At the interview, answer what is asked and then stop. It is a character check, not a negotiation.
- Do not describe renovation plans as already decided. Ask how the alteration process works instead.
- Expect questions about who will live there, how often, and whether anyone else will have use of the apartment.