Closing costs for a seller of a residential co-op apartment is typically broken down into a few categories: brokerage fees, transfer taxes, co-op fees, payoff bank fees and legal fees.
- Brokerage fees. If a broker is involved in the sale of your apartment, sellers are typically responsible for the brokerage fees. Brokerage fees are negotiable and vary depending on multiple factors. In our practice we have found typical brokerage fees to vary between 3-6% of the sales price.
- Transfer taxes. New York State and New York City (if the co-op is within the five boroughs) charge a tax every time there is a transfer of ownership. The transfer tax is a percentage of the sales price. New York State charges 0.4% of the sales price as its transfer tax. New York City charges 1% of the sales price on any residential co-op apartments under $500,000.00. If the sales price is over $500,000.00, New York City charges 1.425% as the transfer tax. There is also an additional $100 filing fee associated with the filing of
- Co-Op fees. Each co-op is unique and has different guidelines and costs involved in their sale transactions. Many co-ops impose what are known as “flip taxes”- these are fees charged by the co-op on the sale or transfer of the apartment. The money generated from flip taxes are generally transferred into the cooperative building’s operating account. These fees vary widely and can be anything from a fixed cost, to a certain dollar amount per share of stock, or a percentage of the sales price. Other fees charged by co-ops include move-out fees, transfer agent fees and stock tax stamp fees. Many co-op management companies may provide a list of fees if asked. It’s usually a good idea to ask your coop management company for a set of co-op fees if available.
- Payoff bank. If there is an outstanding loan on your apartment, you will need to have it satisfied by the closing. Usually, your seller co-op attorney orders the original stock and lease from your lending bank. The stock and lease is forwarded to an attorney which represents the payoff banks interest during the closing. This payoff attorney usually charges a fee for an appearance at the closing. Their job is to collect a check for your outstanding loan balance and bring the original stock and lease to the closing, this way the stock and lease can be transferred to the new owners. This fee is usually around $250-$750 and is charged by the attorney representing your lending bank.
- Legal fees. Typical legal fees for a lawyer representing the seller of a cooperative apartment is approximately $1500. Additional fees may accrue if there is an estate involved or additional legal work needs to be done in excess of the real estate transaction.