Learn The Lingo: A Glossary Of Real Estate Terms, Part 1
NY1's Real Estate reporter Jill Urban helps define some key terms that buyers and sellers should know.
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Buying real estate is a complicated process. There is a lot to know. Aside from the ins and outs of the deal, you also need to speak the language.
“New York City real estate is very intricate and one of the intricacies is the glossary,” says Jacky Teplitzky of Prudential Douglas Elliman. “Sometimes people look at us like we are from mars because we speak in codes, but people need to know what those codes are because they need to ask the right questions.”
There are a lot of terms that new buyers and sellers may have heard, but do not really understand. Many of the terms are associated with co-ops and condos.
What Is A Proprietary Lease?
“In a cooperative, you don’t actually own the apartment, you own shares in the corporation,” explains Paul Purcell of Braddock + Purcell. “The shares don’t entitle you to occupy the apartment, but the proprietary lease tells you that you can live in this particular unit, what the rules are – usually it’s accompanied by the bylaws of the building. It spells everything out that you are allowed to do and it is truly the document that allows you to say, ‘I can live in this apartment.’”
What Is A Sponsor Unit?
“The sponsor unit is a certain amount of apartments that the original entity that converted the building from a rental to a coop kept for themselves,” says Teplitzky. “They can rent them out for cash flow purposes or they can actually resell them. If they resell them, the nice thing for the consumer is that the consumer doesn’t need to go through the process of board approval.”
Sponsor units are often hard to come by these days, but they are out there.
What Is A Flip Tax?
“A flip tax is a fee that a coop or condo imposes on a seller to create additional revenue to the coop or condo, which is generally used to make capital improvement to the building,” says real estate attorney Ron Gitter. “Not every building has a flip tax, and it’s always a point of controversy because it’s a fee imposed on the seller.”
And, depending on the market it’s sometimes paid for by the buyer.
In a condo, the flip tax is called a capital contribution, and the amount varies from building to building.
What Is A Mansion Tax?
A mansion tax is a fee imposed on the buyer of a condo or coop where the purchase price is $1 million or more. Once it hits a million, the buyer has to pay one percent of the purchase price to New York State.