Proprietary Lease Expiration in NYC Explained
Is a co-op proprietary lease expiration possible in NYC? What happens when a NYC co-op apartment’s proprietary lease nears expiration? Have you ever wondered why your co-op board doesn’t just extend the expiration date of every shareholder’s proprietary lease hundreds of years into the future?
A proprietary lease expiration is extremely unlikely to ever happen because a co-op board will always extend the expiration date of every shareholder’s proprietary lease. When a co-op’s proprietary lease approaches 30 years before expiration, a co-op board will always remember to extend the life of the proprietary lease for another batch of years into the future.
They will do this because most bank lenders will not agree to finance a co-op apartment purchase if the tenor of their loan is longer than the remaining life of the proprietary lease. As a result, a co-op board’s duty will be to always make sure the proprietary lease has at least 30 years left of life so as to not hinder the ability of shareholders to refinance their loans and for new buyers to secure financing.
Every shareholder shares the same, most updated version of the co-op’s proprietary lease. This is the case even if the shareholder’s original proprietary lease received at purchase is now outdated. The latest version of the co-op’s proprietary lease applies to every single shareholder. As a result, it is not possible for a co-op board to somehow single out a shareholder and punish them by having only their proprietary lease expire.
Why can’t co-op boards just extend the proprietary lease hundreds of years into the future?
Extending a co-op’s proprietary lease hundreds or even thousands of years into the future would be convenient and would also ensure that a co-op board won’t negligently forget to extend the lease; however, granting such a lengthy lease to a shareholder could be interpreted by the government as a transfer of ownership.
If the government suspects that a transfer of ownership has in fact occurred, the co-op could be liable for paying NYC and New York State transfer taxes! This is precisely why co-op boards will always try to keep the minimum life of their proprietary leases at 30 years but won’t extend it too much longer than that.
Read the Full Article: https://www.hauseit.com/nyc-co-op-proprietary-lease-expiration/
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