Wait a second. You say you bought your apartment, but you don’t own it? Huh?”
Explain the concept of the cooperative apartment —you buy shares of a corporation and then rent the apartment to yourself—to a homeowner outside of New York City, and you can’t blame them if they look at you like you’re crazy.
But this crazy form of apartment ownership, by far the most prevalent in New York City, is one reason co-ops have largely escaped the disaster that has befallen so many condo associations across the country over the last few years: the avalanche of owners falling into delinquency and default.
Because of the greater power co-op corporation boards have in qualifying—and disqualifying—potential buyers, “they really delve into the finances and employment” of people seeking to buy into their community, notes Steven Chase, partner with Kramer & Shapiro in Kew Gardens, Queens. And boards are typically quick to ban investors and curtail sublets.
But while the number of co-op shareholders falling into arrears on their monthly maintenance hasn’t risen substantially, despite the economic downturn, the problem has not gone away—people lose jobs, face medical emergencies, divorce and die in any economy—and its effects are more damaging to the corporation today.