I am contemplating buying 250 shares in an HDFC with a proprietary lease to a 3-bedroom apartment for $200,000.00.
However, the apartment is not in a livable condition. I don’t mean that it needs cosmetic repairs—it needs at least $100,000.00 in renovation (we’ve done this before in a different kind of co-op so we are familiar with the costs). Floors, walls, kitchen, bath, all need to be replaced, and the electrical and plumbing need significant work. I don’t think it would even be legal to reside in an apartment in the condition of this one.
We can comfortably afford both the purchase price and the renovation cost, for a total of $300,000.00. However, according to the application “the apartment is subject to a lien for profits from the resale of the shares of the cooperative which is set forth in the proprietary lease and By-Laws for a period of thirty (30) years from the date title to the building was transferred from the City of New York. In addition, shares in the corporation are transferable only to families who earn no more than 120% of the median income…”
We have not yet been able to get hold of the broker/attorney regarding the date of transfer from the city, or what percentage of the profit is under lien from the City and what percentage goes to the co-op. She mentioned NOTHING like this when she showed us the place.
So the question is, does the lien apply to profits based solely on the purchase and sale of the shares? As in, any profit above $200,000? That would make this completely unfeasible…the apartment will not be livable in its current state, and we would lose a tremendous amount of money on the renovation. Is there any legal way to get the cost of renovation to figure in when selling, and calculating profit?
We plan to live there for at least 6 years.