I guess this is another reason why you need a real estate lawyer. Co-owning a large apartment building without owning the land is a terrible idea that I would never have thought of. But I suppose...
I guess this is another reason why you need a real estate lawyer. Co-owning a large apartment building without owning the land is a terrible idea that I would never have thought of.
But I suppose a hundred-year lease seemed fine to the people who made the agreement, since the new owners (perhaps their descendants) wouldn’t even be born yet. I’ve heard that in some financial circles, this sort of thing is called IBGYBG, which stands for “I’ll be gone, you’ll be gone.”
The legislature changing the deal doesn’t seem like such a bad thing for a problem set up by people a hundred years ago. Also, it seems like this sort of agreement needs to be phased out? I’m wondering if people are making new agreements like this?
What specific type of agreements should be phrased out? Never thought about this either, even though I almost bought a Coop in Queens before the pandemic. It would be hard to pull the carpet under...
What specific type of agreements should be phrased out?
Never thought about this either, even though I almost bought a Coop in Queens before the pandemic. It would be hard to pull the carpet under the table situation that would take more than a real estate lawyer. Even if they did, it will all be a lengthly court process.
There isn't any new Coop being built in NYC. It's mostly condos, which has its ups and downs.
Coop is more of a response for residents and developers to take ownership over their buildings such who lives there and maintenance. I used to lived in a coop where the residents ousted their slumlord in the 70s and formed a Coop. The residents in that specific building are pretty dilligent in building repairs and picky who gets to live there. Unless a group people have resource and energy to form a corporation, they are not really being formed. Coop model as I understand it was a way for people to own the existing building with a few exception such as Coop City.
Owning a building and renting the land seems like a problem? This is common in mobile home parks, but I can see how it should be allowed because in theory, if the landlord raises the rent too...
Owning a building and renting the land seems like a problem? This is common in mobile home parks, but I can see how it should be allowed because in theory, if the landlord raises the rent too much, a mobile home could be moved. (In practice, it sucks.)
For a high rise apartment building, that’s not an option and I don’t think it should be allowed at all. You are both owning and renting at the same time, and if the landlord raises the rent enough, you lose your investment. How is that negotiation supposed to work?
A ground lease seems like a mortgage with terrible terms: it never gets paid off, and at a certain point the “bank” (landlord) can change the terms to whatever they like. It seems like a coop should own the land and pay for it with a regular mortgage?
I agree mostly, but I want to preface I dont have too much expertise in this subject matter, just local knowledge. Originally when I read the question, I thought it pertains to coops in general....
I agree mostly, but I want to preface I dont have too much expertise in this subject matter, just local knowledge. Originally when I read the question, I thought it pertains to coops in general.
The better way is to allow the coop to have some sort of finance agreement to buyout the land. Although this is much more complicated then it seems. Like Coop City is leased by the state government so buying out state land is either impossible or next to impossible. That some residents want the land to be leased by the state rather than themselves. Individual situation depends on who owns the lands, how much the coop can feasible finance, cooperation from coop board.
From the article: … … … … Wikipedia has an article about Ground Rent that talks about how this works in many countries. For New York City, they say:
From the article:
A throng of city co-op apartment owners traveled to Albany last week to plead their case for bills that would shield them from rent increases on the land their buildings sit on. Calling themselves the Ground Lease Co-op Coalition, they are demanding protections even stricter than those recently passed for tenants under the Good Cause law Gov. Kathy Hochul signed earlier this month.
Assemblymember Linda Rosenthal (D-Manhattan) and Sen. Liz Krueger (D-Manhattan) are the lead sponsors of bills that would cap any annual rent increase for co-op buildings on ground leases by 3% or the consumer price index, whichever is greater. It would also allow for the co-op to take on a mortgage or other forms of debt for repairs, maintenance and capital improvements.
…
She stood with Bronx, Brooklyn and Queens shareholders whose co-ops lease their land, worried that one day in the future the landowner could make remaining in their homes unaffordable. But it’s Manhattan co-op owners — mired in a big-money legal battle with their landowners — who are bankrolling the campaign, state records show.
…
The Carnegie House owners’ spending to lobby Albany lawmakers is an investment with big potential payoff for them: their ground rent could increase as much as fivefold, they predict, when their lease expires in March. They currently pay $4.4 million per year in ground rent.
Landowners David Werner and Rubin Schron purchased the property for $270 million in 2014. In 2019, their venture Werner Group demanded the shareholders pay $280 million for the land, an offer they refused. The potential hike is so steep that co-op leaders have discussed refusing to renew the lease — a step that would require them to dissolve the co-op and become rent-stabilized tenants.
…
According to the lobbyists Carnegie House hired, 4,700 apartments in Queens are part of co-ops or condos with ground leases, more than any other borough. Manhattan has 4,000 ground lease units, whereas 900 are in Brooklyn and 500 in The Bronx, with an additional 1,700 in Westchester County.
…
Jennifer Wagner is currently the co-op president of Sheepshead Terrace, a 169-unit co-op in Sheepshead Bay, Brooklyn, built in the 1950s under a century-long ground lease.
Now fewer than 30 years are left on that lease — and that’s making some banks refuse to lend in the building, leading prospective apartment buyers to walk away.
Wikipedia has an article about Ground Rent that talks about how this works in many countries. For New York City, they say:
Apartments in land-lease buildings tend to cost "25 ... to 40 percent" less than comparable units in buildings on owned land, according to one New York City property broker, but their "perceived risk" may cause difficulty selling or financing them. Monthly costs include rent payments for the land, so they are significantly higher than fees in an owned building, and can rise sharply and unexpectedly if the land's value is reassessed during a real estate boom. Theoretically, the expiration of a land lease could even turn shareholders/owners to tenants and render their investments worthless.
I guess this is another reason why you need a real estate lawyer. Co-owning a large apartment building without owning the land is a terrible idea that I would never have thought of.
But I suppose a hundred-year lease seemed fine to the people who made the agreement, since the new owners (perhaps their descendants) wouldn’t even be born yet. I’ve heard that in some financial circles, this sort of thing is called IBGYBG, which stands for “I’ll be gone, you’ll be gone.”
The legislature changing the deal doesn’t seem like such a bad thing for a problem set up by people a hundred years ago. Also, it seems like this sort of agreement needs to be phased out? I’m wondering if people are making new agreements like this?
What specific type of agreements should be phrased out?
Never thought about this either, even though I almost bought a Coop in Queens before the pandemic. It would be hard to pull the carpet under the table situation that would take more than a real estate lawyer. Even if they did, it will all be a lengthly court process.
There isn't any new Coop being built in NYC. It's mostly condos, which has its ups and downs.
Coop is more of a response for residents and developers to take ownership over their buildings such who lives there and maintenance. I used to lived in a coop where the residents ousted their slumlord in the 70s and formed a Coop. The residents in that specific building are pretty dilligent in building repairs and picky who gets to live there. Unless a group people have resource and energy to form a corporation, they are not really being formed. Coop model as I understand it was a way for people to own the existing building with a few exception such as Coop City.
Owning a building and renting the land seems like a problem? This is common in mobile home parks, but I can see how it should be allowed because in theory, if the landlord raises the rent too much, a mobile home could be moved. (In practice, it sucks.)
For a high rise apartment building, that’s not an option and I don’t think it should be allowed at all. You are both owning and renting at the same time, and if the landlord raises the rent enough, you lose your investment. How is that negotiation supposed to work?
A ground lease seems like a mortgage with terrible terms: it never gets paid off, and at a certain point the “bank” (landlord) can change the terms to whatever they like. It seems like a coop should own the land and pay for it with a regular mortgage?
I agree mostly, but I want to preface I dont have too much expertise in this subject matter, just local knowledge. Originally when I read the question, I thought it pertains to coops in general.
The better way is to allow the coop to have some sort of finance agreement to buyout the land. Although this is much more complicated then it seems. Like Coop City is leased by the state government so buying out state land is either impossible or next to impossible. That some residents want the land to be leased by the state rather than themselves. Individual situation depends on who owns the lands, how much the coop can feasible finance, cooperation from coop board.
From the article:
…
…
…
…
Wikipedia has an article about Ground Rent that talks about how this works in many countries. For New York City, they say: