Sponsor Sales in Your Neighborhood?
A: Looking for no board approval but can't afford the premium that condo's get in NYC? Then you need a sponsor sale! In short, a sponsor unit is a leftover unit from the developer that was held for whatever reason, and is now being sold. Since you are buying from the developer there is no board approval process.
According to Wallfly.com's Glossary: Sponsor Unit: Apartments that are held as an investment by the sponsor - the original developer who built the building or converted the the building to a co-op. Sponsor apartments are usually exempt from board approval.
In a co-op, sponsor units are called "unsold shares" and they can be marketed by the sponsor until they are all sold. This process can take many years in a co-op or condo when a converted building has rent-regulated tenants who are not required to vacate.
Typically, in a Sponsor sale there is:
Needless to say, you should discuss any sponsor sale purchase with your hired attorney to make sure you fully understand all aspects of the transaction, especially the fees that might be passed down to you!
Here are a few sponsor sales that might be in your neighborhood:
101 West 23rd Street
Price: $789,000
Size: 1,400 sft
Maint: $2,128
PPSF: $564
# Beds: 3
# Baths: 2
310 East 46th Street
Price: $695,000
Size: 800 sft
Maint: $1,835
PPSF: $869
# Beds: 1
# Baths: 1
319 East 50th Street
Price: $699,000
Size: 762 sft
Maint: $836
PPSF: $917
# Beds: 1
# Baths: 1
215 East 80th Street
Price: $2,100,000
Size: 1,628 sft
Maint: $966
RE Taxes: $747
PPSF: $1,289
# Beds: Conv 2
# Baths: 1
315 Riverside Drive
Price: $1,175,000
Size: N/A
Maint: N/A
RE Taxes: $747
PPSF: $1,121
# Beds: 2
# Baths: 2
Posted by Dave
Wed Oct 25th, 2006 04:33 PM
Hey Noah - what's the deal with sponsor sale co-op's being used as investment vehicles? I know that boards often won't give approval for a long term letting on a co-op apartment, but is this any different for sponsor sale apartments or do you fall under the usual "rules" of the board once you have bought the place from the sponsor?
Cheers!
Posted by Noah
Thu Oct 26th, 2006 09:33 PM
Great question Dave. I believe that the purchaser from the sponser unit gets exempt from the usual board process and min down payment requirements that existing sales in the co-op have to go through.
However, when the purchaser goes to resell, he/she must go through the same board requirements as any other existing shareholder in the corporation; that is, fin requirements, salary requirements, subletting rules, etc..
So, buying from a sponsor should NOT be used as an investment vehicle unless the board is already liberal to these types of policies!
Posted by joshua
Fri Oct 27th, 2006 07:30 PM
I'm in the midst of renovating and flipping a 'sponsor unit'. I purchased it about a year ago and have learned that my worst fear is a board imposed, flip tax, during renovation. This unbelieveable, yet legal, imposition of a tax that goes directly into the buildings coffers can get ya from behind at any moment. Also, check out how many units still remain unsold, which, as in my case, tend to be occupied by rent-stabilized tenants who can really live up to their bad name.
Posted by Dave
Mon Nov 27th, 2006 04:07 PM
Question: If you are buying a sponsor unit, can you do a piggyback loan and get away with putting no money down? (I know it is risky, but was curious).
Thanks,
-Dave
Posted by Pearl
Fri Apr 13th, 2007 05:03 PM
Hi
I am interested in a condo that is being sold by a sponsor. My (buyer) broker has been very unhelpful, and I want to go with another broker. However, the sponsor has signed an agreement to protect the buyer broker for 90 days. The sponsor will also not pay the other broker that I use. Obviously its quite unfair for me as a buyer, and I doubt the credibility of a sponsor who will sign on such buyer brokers. Anyway, I guess you would know the terms of similar agreements, and I am wondering if there would be any clause that may divert the old broker's commission to the new one.
Posted by Larry Rothenberg
Wed May 13th, 2009 08:49 PM
Is there any web site that you can recommend that would give me a listing of available sponsor units in NYC?
Posted by Mbt
Thu Jun 3rd, 2010 01:56 AM
I think another reason fees are not being paid and free months not offered is that prices have come down. Apartments are moving but part of the reason is that prices came down to a point at which they will move.
Posted by Chelle
Fri Nov 12th, 2010 03:01 PM
Hi
I have a question, if a listing says "Sponsor co-op no board approval required". Do you still have to fill out the paperwork that the boards gives out to regular purchasers? The reason why I'm asking is becuase I already have a bank approval, and am waiting for the bank to tell me closing date. But now all of a sudden the board wants me to send them signed paperwork, that my bank already has and on top of that wants to charge me filing fees and board fees, and the big kicker, the paperwork says process takes 6-8 weeks and don't schedule closing until the board meeting. Do I still have to pay the fees and get a board meeting/ interview, if it indicates "no board approval required"?
Posted by Noah
Sat Nov 13th, 2010 10:37 PM
Chelle - YES! You still have to fill out application, pay fees, and go through regular channels, except its likely a SPONSOR holding and thereby a formal coop interview process and review is skipped. Every bldg is different, but you still need to fill out the paperwork and likely go through standard mgmt processing period.
Posted by David
Mon Nov 15th, 2010 07:12 AM
Hi Noah,
If a sponsor wishes to gift his unsold units to an LLC, and then gift the shares of of the LLC in trusts to his grandchildren to take advantage of the generation skipping tax incentives still in effect this year, is the LLC able to retain the original sponsor share rights (eg, prospective tenants not required to go before the board, etc.)? If not, is there another way to do this that would retain these original sponsor rights (perhaps with an limited partnership, family partnership, or some other way)?
Posted by Noah
Mon Nov 15th, 2010 09:31 AM
Hmmm, good question David, I really do not know. I think you should consult a real estate atty for proper clarification on that one. Sorry.