New York Real Estate: What Is A “Sponsor Unit”?
What is a Sponsor unit?
A Sponsor apartment is a unit owned
by the original owner or corporation responsible for converting a building
from a rental into a cooperative ownership.
The Sponsor may still have an
original (regulated) tenant occupying the apartment who did not purchase the
apartment during the original conversation (rules allowed the tenant to stay) from
rental to cooperative ownership. Also, a Sponsor unit may no longer have an
original (regulated) tenant but a fair market tenant. If a Sponsor unit has
been vacated by an original regulated tenant and possession transfers to the
Sponsor, they can either rent it at fair market or sell the apartment at anytime
What are the advantages of buying a
The biggest advantage of purchasing
a Sponsor unit is that the buyer does not have to go through the dreaded co-op
board approval process (comprehensive application and personal interview).
In many cases, buyers may have the
option of bypassing typical building rules such as the required amount for down
payment. A Sponsor might allow financing up to ninety-percent of the purchase
price, bypassing the Cooperative’s more stringent requirement. If the
buyer is paying all cash, the transaction from contract to closing can take place
quickly, unlike a board approval process which may take several months. In addition, in most cases application and
other co-op process fees are waived.
Are there additional costs when of
buying a Sponsor apartment?
Yes. The Sponsor almost always has the buyer pay the NYC and NYS transfer
A purchase price $500,000 and under
NYC RPTT = 1% NYS RPTT = $2 per $500 or
A purchase price $500,001 and
RPTT = 1.425% NYS RPTT = $2 per $500 or