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HDFC COOPERATIVE APARTMENTS

HDFC stands for Housing Development Fund Corporation and is a incorporated under Article XI of the Private Housing Finance Law wherein buildings were and continue to be converted to cooperative apartments owned and managed by tenants turned shareholders with the goal being the rehabilitation of an under performing building into a successful, self-sufficient corporation.

WANT TO SELL YOUR HDFC?
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THE HISTORY

Beginning in the 1970s- when New York City was in financial turmoil- many building owners stopped paying property taxes and allowed their buildings to fall into disrepair as the costs to renovate and maintain outweighed the rental income forcing countless owners into bankruptcy.

As the buildings sat in a state of abandonment the city chose to offload the burden of managing so many properties and began offering the sale of individual units- restructured as HDFC cooperative apartments- to tenants (renters) living in the buildings. These units were initially sold for $250 and included a property tax incentive, but came with the responsibility of renovating, managing, and maintaining a property that would often end up taking years to turn around.

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INCOME LIMITS

HOW ARE INCOME LIMITS GENERALLY SET FOR HDFC APARTMENTS?

HDFC cooperatives typically use two methods to determine income limits for prospective buyers: a percentage of the Area Median Income (AMI) or a formula that takes into account monthly maintenance fees, utilities (such as gas and electric), and the number of months in a year.

Please refer to the Income Limit AMI chart and accompanying explanations for further details on income limits.

It is important to note that HDFC cooperatives do not impose asset caps. This means that individuals who have inherited money, possess significant savings despite a low income, or have received financial gifts from family members can still purchase a property, as long as it complies with the regulatory agreement and by-laws of the building.

Income Limit AMI
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RESALE PRICES

IS THERE A CAP ON THE PRICE OF AN HDFC APARTMENT SALE?

Depending on when a building's governing documents were signed, HDFC cooperatives do not have restrictions or caps on resale prices. Over the years, real estate prices in New York City have grown faster than Area Median Incomes. This has given shareholders the challenging yet profitable goal of maximizing equity when selling their homes. Meanwhile, cooperative boards ensure that potential buyers meet income requirements and align well with the established community.

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SUBLETTING

CAN I SUBLET MY HDFC APARTMENT?

Most HDFC coops require owner-occupancy as stated in their Certificates of Incorporation. According to Article XI, these corporations must prioritize the well-being of resident shareholders.

Subletting is generally limited in most HDFC coops. Short-term subletting with permission from the Board of Directors is usually allowed if the shareholder plans to return to their apartment. However, long-term sublets are not permitted. All subtenants must meet the income eligibility requirements set by the HDFC coop.

A shareholder should check the HDFC’s governing documents and any agreements binding the HDFC to determine these restrictions. At all times, an HDFC must comply with the requirements of Article XI of the Private Housing Finance Law.

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FLIP TAXES

WHAT IS A FLIP TAX AND WHERE DOES THE MONEY GO?

Most HDFC cooperative apartments require sellers to pay a flip tax at closing, which comes from the sale's profits. This money is divided among the seller, the cooperative building/board, and sometimes the city government.

Flip taxes can be calculated in different ways and the percentage allocated to the seller/shareholder, building/board, and city may vary. The flip tax can be a percentage of the profit, a predetermined flat fee, or based on a calculation per share.

For instance, the seller/shareholder and the building/board receive profits from the sale as part of the flip tax calculation. The building/board uses these funds to pay off debts, undertake building-wide improvements, and maintain stability in monthly maintenance payments for shareholders.

Here's how to calculate flip taxes.

Please be aware that we are unable to offer legal, financial, or architectural advice. Compass is a licensed real estate brokerage in the state of New York.

The information provided above is solely for informational purposes. If you are a buyer or seller of HDFC Cooperatives, it is recommended that you direct any legal, financial, or architectural inquiries to your building's board or management. Additionally, it is advisable to consult the appropriate professionals and review your building's governing documents.

SELL YOUR HDFC

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110th 5th Ave., 3rd Fl
New York City, NY 10011

Max Moondoc

(917) 860-4749

[email protected]

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