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My rental was converted to a co-op years ago. Can I buy it at a discount?

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I've been living in my apartment for 35 years before it became a co-op building. I was offered the apartment for $90,000 decades ago. Now the market price is about $700,000. (The apartment has had the same sponsor for many years.) How can I buy the apartment? And would I have to pay market price even though I've lived here for so long?


Assuming that your lease is rent-stabilized, it's very likely that you can still buy the apartment at a discount, say our experts, though most likely at a significantly higher price than that initial $90K offer. 

"Unfortunately, the $90,000 'insider' price has gone the way of the $2.50 MTA toll and the 13-cent stamp," says Jeff Reich, an attorney with Schwarz Sladkus Reich Greenberg Atlas LLP. "However, if the tenancy is one protected by rent stabilization or rent control, the owner of the shares of stock and proprietary lease would have an economic incentive to offer the tenant a below market price for the apartment."

This is because if you're rent-stabilized (and you likely are, given how long you've been in the apartment and that your unit hasn't been sold to a new owner), the apartment can't be sold without the tenancy, and if you're paying well below market rate rent, that could make the purchase a much less appealing investment to a buyer.

However, the exact size of that discount will depend on numerous factors, including how low your rent is compared to the going market rate, your age (for starters, how long would you be in the apartment paying your low, stabilized rent?), and whether the amount of your rent is enough to cover the apartment's carrying costs (maintenance charges, etc.). If the rent does not cover the carrying cost of the apartment, the sponsor is much more motivated to sell at a discounted price so as to get rid of the negative cash flow," explains Norris McLaughlin & Marcus attorney Dean Roberts. "However, conversely if the rents are above the carrying cost, the sponsor is not suffering any real cost and can wait out the tenant to sell the unit for its full market value after the tenant vacates."

If the numbers work in your favor, says Reich, you could be looking at a discounted sales price for as much as 35 to 40 percent below the market rate.

If you're interested in potentially making the purchase, Roberts suggests hiring an attorney to review the co-op's offering plan, financials, and other paperwork, then having them contact the building's sponsor to start the negotiating process. (Considering the large amount of money you stand to save here if the deal is done right, far better to have a professional handle the haggling.) "Given that you're the apartment's current tenant, you have a substantial advantage over any other bidder" Roberts adds, since you're the one already living in it. Soon enough, your monthly rent checks could transform into mortgage payments.

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