New York Real Estate Salesperson ExaminationNew York State Specific Laws and RegulationsMedium
A real estate licensee is listing a property that is part of a cooperative housing corporation. Which of the following statements is true regarding the sale of a co-op unit in New York?
- ACo-op boards have no right to reject a prospective buyer, as it violates fair housing laws.
- BThe buyer receives a deed to the specific apartment unit.
- CThe sale involves the transfer of shares of stock and a proprietary lease.
- DCo-op units are considered real property for all legal purposes, similar to condominiums.
Show answer & explanationAnswer & explanation
Correct answer: C. The sale involves the transfer of shares of stock and a proprietary lease.
In a cooperative, a buyer purchases shares of stock in the cooperative corporation, which then grants them a proprietary lease for a specific unit. Ownership is of the shares, not the physical real estate itself.
Why the other options are wrong
- A. Co-op boards generally have the right to approve or reject prospective buyers, provided their decisions are not based on discriminatory reasons prohibited by fair housing laws.
- B. A deed transfers ownership of real property; co-op owners receive shares and a proprietary lease, not a deed to a unit.
- D. Co-op units are considered personal property (shares of stock), not real property, which has significant implications for financing, taxation, and transfer.
Cooperative (Co-op)
A form of homeownership where residents own shares in a corporation that owns the building, and those shares entitle them to a proprietary lease for a specific unit.
- Shares are personal property.
- Board approval required for sale/sublease.
- Proprietary lease grants occupancy rights.
Memory trick: Co-op shares the building, condo owns the air.