The Complete Guide to NYC Co-op Closing Costs

Closing costs in New York City are very different from those in other parts of the country, especially when it comes to co-ops. The buying and selling process involves several unique taxes and fees specific to New York State and City, so we’ve put together the following guide to help you understand the ins and outs.

Typical NYC Co-op Closing Costs

Co-op Seller Closing Costs

Attorney Fees

Varies by Attorney

When selling a cooperative apartment in New York City, the seller’s attorney plays a critical role in ensuring that the transaction is completed successfully. Their fee typically ranges between $2,000-$4,000 but can vary widely by attorney. Their fee covers a wide variety of legal responsibilities, but we’ve outlined some of the most common below:

• Reviewing and drafting contracts: The seller’s attorney will typically review and, if necessary, negotiate the terms of the contract of sale, which is the legal document that outlines the terms of the sale. The attorney will ensure that the contract reflects the seller’s interests and protects them from any potential liabilities.
• Conducting due diligence: The seller’s attorney will conduct due diligence on the building and the cooperative board to ensure that there are no issues that could impact the sale. This may include reviewing the building’s financial statements, bylaws, and board minutes.
• Clearing title: The seller’s attorney will work to clear any title issues that could affect the sale. This may involve reviewing title reports and resolving any outstanding liens or judgments.
• Coordinating with the cooperative board: The seller’s attorney will communicate with the cooperative board and their attorneys to ensure that all necessary approvals are obtained and that the sale complies with the building’s rules and regulations.
• Closing the sale: The seller’s attorney will attend the closing and ensure that all necessary documents are signed and funds are transferred. A great real estate attorney can make a closing smooth and hassle free, while an inexperienced attorney can make a closing difficult. Be sure to speak with your real estate agent, who can make a recommendation that will make the process as smooth as possible.

Overall, the seller’s attorney plays an essential role in ensuring that the sale of a cooperative apartment in NYC goes smoothly and that the seller’s interests are protected throughout the transaction.

Stock Transfer Stamps

$0.05 per share

In New York City, the transfer of ownership of stocks in a corporation that owns residential real estate is subject to a stock transfer tax. The tax is imposed on the value of the stock being transferred and is typically paid by the seller of the stock (in this case, the seller of a co-op apartment). The stock transfer tax is calculated as a percentage of the value of the stock being transferred, with the exact rate varying depending on the value of the stock and other factors.

Because co-op owners are tenant shareholders when they sell their apartments they must purchase stock transfer tax stamps from the NYC Department of Finance. The stamps serve as proof that the transfer tax has been paid and enable the transfer of ownership to be legally recorded. These are $0.05/share, so it is one of the smallest closing costs.

NYC Real Property Transfer Tax

1% of the sale price if $500K or less; 1.425% of the sale price if more than $500K

The NYC Real Property Transfer Tax is imposed by the city of New York on the sale or transfer of real property, which includes things like buildings, land, and apartments (including co-ops). The tax is calculated based on the purchase price of the property and in the case of co-ops is usually paid by the seller.

The tax is calculated as a percentage of the purchase price of the property, and the rate varies depending on the purchase price. For example, for properties that sell for $500,000 or less, the tax rate is 1%. For properties that sell for more than $500,000, the tax rate increases to 1.425%.

One might think that since co-ops are not considered ‘real property’ since owners actually have a leasehold interest rather than a lot and block number that they wouldn’t have to pay a real property transfer tax, but since NYC recognizes owning shares in a co-op’s corporation as a type of property ownership, the NYC Real Property Transfer Tax applies. The exact language according to the NYC Department of Finance is:

“You must pay the Real Property Transfer Tax (RPTT) on sales, grants, assignments, transfers or surrenders of real property in New York City. You must also pay RPTT for the sale or transfer of at least 50% of ownership in a corporation, partnership, trust, or other entity that owns/leases property and transfers of cooperative housing stock shares.”

NYS Transfer Tax

0.4% of sale price for transactions less than $3M. 0.65% of sale price for transactions greater than or equal to $3M

When selling a NYC co-op, you will have to pay the New York State Transfer Tax , which is a tax imposed by the state of New York on the transfer of property. It is different from the NYC Real Property Transfer Tax – one is a local NYC tax, and the other is a NY state tax. The NYS Transfer Tax is typically paid by the seller of a property at the time of closing, though the buyer and seller may negotiate to split the cost of the transfer tax.

The transfer tax rate for residential properties in New York State is 0.4% of the sale price on transactions up to $3,000,000, and 0.65% above $3M. For example, if a seller sells a residential property for $1,000,000, they would need to pay a transfer tax of $4,000 (0.4% of $1,000,000) to the state of New York.

UCC-3 Filing

$75-$125

A UCC-3 filing is a form used to amend or terminate a previously filed UCC-1 financing statement. A UCC-1 financing statement is a legal document that provides notice of a secured party’s interest in personal property, such as a mortgage or security interest in a co-op unit.

In the context of purchasing a co-op, a UCC-3 filing may be necessary if the seller has an outstanding mortgage or lien on the co-op unit (in other words, the seller financed their purchase of the co-op). 

The UCC-3 filing is typically prepared by the buyer’s attorney and filed with the appropriate state agency. The filing fee for a UCC-3 form can vary depending on the state and the complexity of the transaction, but typically ranges between $75-$125.

Flip Tax (if applicable)

Amount determined by co-op building (unless otherwise stated or negotiated)

A flip tax refers to a fee charged by the co-op building’s management company or board when a shareholder sells their co-op unit. The flip tax is typically a percentage of the sale price, and the proceeds are used to fund capital improvements or to offset the building’s operating costs.

Flip taxes are not uncommon in New York City co-op buildings and can range from a few thousand dollars to tens of thousands of dollars, depending on the building and the percentage charged. While it is typical for the seller to pay the flip tax, it can be paid by the seller, the buyer, or split between the two parties, depending on the terms of the sale. The co-op’s board will typically determine who should pay the flip tax, but it can often be negotiated.

Flip taxes are designed to generate revenue for the building association and may be used to fund building improvements or reserve funds. In some cases, buyers may negotiate with the seller to split the cost of the flip tax or negotiate a lower sale price to offset the cost of the flip tax.

Payoff Bank Attorney (if applicable)

$450-$550

If the seller has an existing mortgage that is to be paid off at the closing table, the bank will have a representative at the closing table to collect the balance due. The cost for this representative is paid by the seller and is typically between $450-$550.

This fee is similar to the payoff bank fees seen in a condo – the difference lies in how the mortgages for each property type are held. Because of the difference in ownership structure, the process for paying off bank loans can differ for co-ops and condos. In a co-op, the corporation typically takes out a loan for the entire building (including common areas), and the shareholders collectively repay the loan through their monthly lease and maintenance fees. Therefore, when a co-op unit is sold, the buyer will be responsible for paying their portion of the outstanding loan balance.

In a condo, each owner typically has their own mortgage, and the buyer’s representatives are responsible for paying it off at the time of closing. Therefore, there is no need for a payoff bank attorney in a condo transaction, and instead of paying a payoff bank attorney, sellers would pay a bank attorney fee to their individual lender to cover the work associated with the transaction.

Managing Agent Fees

$650 and up

The building managing agent fee is charged to compensate the managing agent for their time and resources in relation to selling a NYC co-op.

The fee can vary depending on the specific building where the co-op is located. It is typically a one-time fee that is paid by the seller at the time of closing and is not refundable even if the transaction does not close.

This is different from the Building Management Agent Fee, which typically covers the cost of the building application for buyers when they purchase a NYC co-op.

Move-Out Fee & Deposit

$500 and up for each

The move-out fee and deposit is typically required for any seller, but is most commonly paid with a board package rather than at the closing table. The fee is for the use of the service elevator and building staff for the coordination of the move, while the deposit is designed to cover any potential damage or cleaning costs that may occur when the buyer moves into the property.  The amount of the move-out fee and deposit can vary depending on the building and the terms of the sale, but each are typically a minimum of $500. 

Broker Commission

6% of the sale price

When a property is sold with the assistance of real estate agents or brokers (as is nearly always the case in NYC), it is common practice for the seller to pay a commission to both their own broker and the buyer’s broker. This commission is typically calculated as a percentage of the sale price of the property and is split evenly between the two brokers. In most cases, the commission is around 6% of the sale price, although this can vary depending on the specific agreement between the seller and the brokers.

For example, if a property sells for $1,000,000 with a 6% commission rate, the total commission paid by the seller would be $60,000. This would be split evenly between the seller’s broker and the buyer’s broker, with each receiving $30,000.

It’s important to note that the specific commission structure can vary depending on the agreement between the seller and their broker. In some cases, the commission may be negotiable or the seller may choose to work with a broker who charges a lower commission rate. Additionally, in some cases, the buyer may agree to pay their own broker’s commission rather than having it split with the seller.

Overall, it’s important for sellers to understand the commission structure and any associated fees before listing their property for sale. Working with an experienced and trustworthy broker can help ensure that the process is transparent and that the seller receives the best possible value for their property.

Estate Fees

Cost Varies

If the seller of a residential property is the estate of a deceased person, estate fees may be applicable. The estate fees are typically calculated as a percentage of the value of the property or the total value of the estate and are intended to cover the costs of administering the transaction through teh co-op’s attorney.

The estate’s executor or administrator typically pays estate fees, but in some cases these may be deducted from the sale proceeds of the property. The exact amount of the estate fees can vary depending on the size and complexity of the estate.

Lost Stock and Lease Fees

$250 and up

Lost stock fees refer to the fee charged by a co-op building’s management company or board when a shareholder has lost their stock certificate, which represents their ownership in the co-op.

This fee is charged to cover the cost of issuing a new stock certificate and updating the co-op’s records.

Lease fees refer to the fee charged by the co-op building’s management company or board when a shareholder is required to renew or update their lease. Co-op shareholders typically lease their unit from the co-op’s corporation, and the lease outlines the terms of the shareholder’s occupancy, including the monthly maintenance fee and any other obligations or restrictions. The lease fee is charged to cover the cost of reviewing and updating the lease documents.

E Tax Filing (ACRIS)

$100

The fee for e-tax filing with ACRIS (also known as the Automated City Register Information System) is about $100, and is charged to record the real estate transaction and to generate and file the necessary documents with the city.

NYS Capital Gains Tax Withholding

8.97% of taxable gain on sale (Only applicable to non-NY residents)

The New York State Capital Gains withholding tax is a tax that is withheld from the seller’s proceeds at the closing of an NYC residential real estate transaction. It is required by the New York State Department of Taxation and Finance to ensure that the seller pays their income taxes on the gain from the sale of their property.

This withholding tax only applies to sellers who are not citizens or residents of New York State. These sellers are subject to a withholding tax of 8.97% on the gain from the sale of their property.

Federal Withholding Tax (FIRPTA)

10%-15% of the sale price if the seller is a non-US resident

Federal withholding tax is a tax that is withheld by the buyer of real estate from the seller’s proceeds at closing. This tax is required by the Internal Revenue Service (IRS) to ensure that the seller pays their income taxes on the gain from the sale of their property.

In the context of NYC residential real estate transactions, the federal withholding tax applies to nonresident foreign sellers who are not citizens or permanent residents of the United States. These sellers are subject to a withholding tax of between 10-15% on the gross proceeds from the sale of their property.

Co-op Buyer Closing Costs

Attorney Fees

Varies by Attorney

When purchasing a cooperative apartment in New York City, a buyer’s attorney plays a crucial role in ensuring that the buyer’s interests are protected throughout the transaction. Their fees range from $2,000-$4,000, but specific fees can vary widely depending on the attorney you choose. Here are some of the key responsibilities of a buyer’s attorney:

• Reviewing and negotiating the contract: The buyer’s attorney will review the contract of sale, which outlines the terms and conditions of the purchase and negotiate any provisions that are unfavorable to the buyer.
• Conducting due diligence: The attorney will conduct due diligence on the cooperative’s corporation, which includes reviewing the building’s financial statements, board meeting minutes, and any pending or potential litigation.
• Coordinating with the lender: If the buyer is obtaining a mortgage to finance the purchase, the attorney will work closely with the lender to ensure that all necessary documents are in order.
• Reviewing the board application: In a cooperative purchase, the buyer must submit a board application to the cooperative’s board for approval. The attorney, along with your broker, will review the application to ensure that it is complete and accurate.
• Attending the closing: The attorney will attend the closing, where the buyer will sign the necessary documents and transfer the purchase funds to the seller. A great real estate attorney can make a closing smooth and hassle free, while an inexperienced attorney can make a closing difficult. Be sure to speak with your real estate agent, who can make a recommendation that will make the process as smooth as possible.

In summary, the buyer’s attorney is responsible for protecting the buyer’s interests and ensuring a smooth transaction when purchasing a cooperative apartment in New York City.

Building Management Agent Fee

$500 and up 

The building management agent fee is charged by the co-ops’ management company to compensate for the managing agent’s time in relation to the transaction. It is typically referred to as an application fee and is submitted with the board package.

The building management agent fee can vary depending on the management company and the specific co-op. This fee is typically not refundable even if the transaction does not close.  This is different from the building managing agent fee that is charged to sellers in co-ops.

Move-in Fee & Deposit

$500 and up for each

The move-in fee and deposit is typically required for any buyer, but is most commonly paid with a board package rather than at the closing table. The fee is for the use of the service elevator and building staff for the coordination of the move, while the deposit is designed to cover any potential damage or cleaning costs that may occur when the buyer moves into the property.  The amount of the move-out fee and deposit can vary depending on the building and the terms of the sale, but each are typically a minimum of $500. 

Lien Search

$350

A judgment and lien search is an important part of the due diligence process. This search is conducted to determine whether there are any outstanding liens or judgments against the property.

If any liens or judgments are discovered, the buyer’s attorney will work to resolve them before the closing, either by paying off the debts or negotiating a settlement with the creditor. Any liens or judgments discovered during the search may result in additional costs for the buyer, and it is important to be aware of these potential expenses when budgeting for the purchase of a property.

A judgment and lien search in a co-op is similar to a title search in a condo, but they differ slightly in scope and purpose. A lien search in a co-op is focused on identifying any outstanding debts or encumbrances on the co-op corporation or shares being sold, while a title search in a condo is focused on identifying the legal ownership of the property and any outstanding liens or encumbrances on the property itself.

Maintenance Adjustment

Pro-rated for the month of closing

A maintenance adjustment is a prorated adjustment to the monthly maintenance fees that are paid by the co-op owner.

Co-op ownership is unique in that it involves owning shares in a corporation rather than ‘real property’. Each co-op owner is responsible for paying their share of the building’s expenses, including maintenance fees that cover the cost of upkeep, repairs, and other building-related expenses.

During the closing process, the buyer and seller must agree on how to prorate the monthly maintenance fees for the period between the closing date and the next billing cycle. If the buyer is purchasing the co-op unit in the middle of a billing cycle, they will owe a prorated portion of the maintenance fees for that billing cycle.

The maintenance adjustment is typically calculated by taking the monthly maintenance fee and dividing it by the number of days in the billing cycle. The resulting amount is then multiplied by the number of days between the closing date and the end of the billing cycle to determine the prorated amount owed by the buyer.

Mansion Tax

Varies by Price of Apartment

The mansion tax (see the dropdown at the link under tax rate for more info) is a New York State tax paid at the closing tabel on residential properties that are sold for $1 million or more. It is a state tax, not a city tax, so it applies to residential transactions throughout New York State, not just in the city. However, since property values in New York City are generally higher than in other parts of the state, the mansion tax tends to have a greater impact on those real estate transactions.

The mansion tax was first introduced in 1989, and it has been amended several times since then. In 2019, the state legislature increased the tax rates based on the purchase price. The change was intended to raise revenue to support the city’s public transportation system.

Mansion Tax Rates:

• Over $1M but less than $2M = 1%
• $2M to less than $3M = 1.25%
• $3M to less than $5M = 1.5%
• $5M to less than $10M = 2.25%
• $10M to less than $15M = 3.25%
• $15M to less than $20M = 3.5%
• $20M to less than $25M = 3.75%
• $25M and up = 3.9%

Co-op Mortgage Associated Fees

Origination Costs & Points

Varies by Bank

Origination costs and points are the same in co-ops and condos – they are fees associated with financing a purchase of NYC real estate.

Origination costs are fees charged by a lender to cover the costs of processing and underwriting a mortgage application. These costs may include application fees, document preparation fees, credit report fees, and other charges. Origination costs are typically calculated as a percentage of the loan amount. These fees are paid at closing and are generally non-refundable.

Points are fees charged by a lender to reduce the interest rate on a mortgage. Each point is equal to 1% of the loan amount. By paying points, the borrower can lower their interest rate and reduce their monthly mortgage payments. However, paying points requires a larger upfront payment, so borrowers should consider their long-term savings before deciding to pay points. It is often helpful to calculate how long it would take to recuperate the cost of buying down the rate, and if the buyer plans to hold the property for longer than that time, it is usually worth it to purchase a lower rate. Points are also paid at closing and are generally non-refundable.

Mortgage Application, Credit Check, Etc

$500 and up

The mortgage application fee is a fee charged by the lender for processing the borrower’s mortgage application. This fee covers the cost of verifying the borrower’s income, employment, and other financial information, as well as any administrative costs associated with the application process. The exact cost of the application fee can vary depending on the lender and the specific loan program being used, but it is typically a percentage of the loan amount or a flat fee.

It’s important to note that not all lenders are used to working with co-op buyers. Because co-ops have a unique ownership structure where owners don’t have a title, but rather own shares of a corporation, some lenders may not offer co-op financing or they may require additional documentation.

With this being said, a great real estate broker will have worked with many lenders that are well versed in co-op financing, and can offer solid referrals.

The credit check fee is the same for condos and co-ops. The credit check fee is charged by the lender for obtaining the borrower’s credit report. The credit report is used to assess the borrower’s creditworthiness and ability to repay the loan. The cost of the credit check fee can vary depending on the lender, but it is typically a flat fee.

It is important to note that both the mortgage application fee and the credit check fee are typically non-refundable, even if the loan is not approved or the transaction does not close. However, some lenders may allow the borrower to roll these fees into the loan amount, which can help to reduce the upfront cost of the transaction.

Appraisal

Cost Varies

The appraisal fee covers the cost of having a professional appraiser assess the value of the co-op unit being purchased.

The appraisal is an important step in the financing process because the lender wants to ensure that the value of the co-op unit is sufficient to serve as collateral for the loan. The appraiser will typically visit the co-op unit and conduct a thorough analysis of its condition, features, location, and other factors that could affect its value. The appraiser will also take into consideration the building’s financial history, condition, and amenities. In a co-op, the appraisal will determine the value of the shares being purchased by the buyer, rather than the value of the physical unit.

The appraisal fee typically covers the cost of the appraiser’s time and expertise, as well as any expenses incurred during the appraisal process, such as travel costs or fees for accessing building amenities. The exact cost of the appraisal fee can vary depending on the size and location of the co-op unit being appraised, as well as the specific appraiser and lender involved.

Co-op and condo appraisals are very similar but do differ in a few areas – most notably size. In a co-op, the physical measurement of the interior space determines the square footage, while in a condo, square footage is determined by what’s listed on a property’s legal description. Condos square footage includes a percentage of the building’s common areas, so it’s not accurate to simply measure the interior space.

It is important to note that the appraisal fee is typically paid by the borrower as part of the closing costs for the transaction, and it is not refundable even if the loan is not approved or the transaction does not close.

Bank Attorney

$800-$1,250

Bank attorney fees are typically charged by the lender that provides the mortgage for the purchase, and are meant to cover the cost of legal work related to the loan. Bank attorney fees can vary depending on the lender and the type of loan that you are obtaining, but are typically between $800-$1,250.

UCC-1 Filing

$125

A UCC-1 filing, also known as a Uniform Commercial Code-1 financing statement, is a legal document that is filed by a creditor to establish their security interest in a particular asset or property.

When purchasing a co-op in New York City, a UCC-1 filing will be required by the lender providing financing for the purchase. This is because co-op ownership is unique in that it involves owning shares in a corporation rather than owning real property outright.

The UCC-1 filing serves as a way for the lender to establish their interest in the borrower’s shares in the co-op corporation. In the event that the borrower defaults on their loan, the lender can use the UCC-1 filing to seize the borrower’s shares in the co-op corporation as collateral for the outstanding debt (though this is very unlikely to happen since the co-op would likely buy the shares from the borrower directly).

Recognition Agreement

$200-$400

A recognition agreement is a legal agreement between the cooperative’s corporation, the tenant shareholder (buyer), and the lender. It is typically required when a co-op unit owner applies for a mortgage, as the lender will want to ensure that the co-op is recognized as a legal entity and that the loan is secured by the underlying co-op shares.

The recognition agreement specifies the rights and obligations of both the co-op and the lender in relation to the loan. It typically includes provisions for the lender to be notified in the event of any changes to the co-op’s bylaws or financial standing, as well as the right of the lender to access certain financial information about the co-op.

By signing a co-op recognition agreement, the co-op acknowledges the existence of the lender’s lien on the co-op shares and agrees to cooperate with the lender to ensure that the loan is repaid in a timely manner.

The agreement is paid for by the buyer as part of the closing costs and is typically between $200-$400.

Need More Information?

Should you have any additional questions about closing costs, and how they can impact you as a NYC buyer or seller, feel free to reach out. We’d welcome the opportunity to discuss your specific circumstances and have the knowledge and experience to help you understand how the closing costs we outlined above would impact your transaction.