A federal rule requiring a report on every non-financed apartment purchase made through an LLC or a trust took effect for closings on or after March 1, 2026. Eighteen days later, on March 19, 2026, the U.S. District Court for the Eastern District of Texas vacated it. FinCEN and the Department of Justice have appealed, and while the court's order stands, reporting persons are not required to file those Real Estate Reports. For a buyer deciding between a condo and a co-op above $2M, that eighteen-day whiplash is a useful reminder: the ownership structure you choose controls who approves you, what the public record shows, and what you are allowed to do with the apartment after closing.
The general comparison between the two is already written, and if you are new to the distinction, start with the co-op versus condo primer. This article is about the questions that only surface at the top of the market: buying in an entity, second-home policies, board financial standards, sublet rights, financing flexibility, and privacy.
As Managing Partner and Principal Broker at Montilla's 159 from 2001 to 2016, I personally vetted every deal in the office before it went to owners, landlords, and management companies, and in my 25+ years selling NYC real estate the single most expensive mistake I see at this price point is a buyer choosing the apartment first and discovering the building's rules second.
The one structural fact everything else follows from
A condo is real property. You take a deed and the apartment is yours the way a house would be. A co-op is not real property. A corporation owns the building, you buy shares in that corporation, and those shares come with a proprietary lease giving you the right to occupy your unit. Every rule below traces back to that one difference. The corporation can set conditions on who holds its shares. A condominium, holding only a bundle of bylaws, has far less room to.
Can you buy it in an LLC or a trust?
This is usually the first real fork in the road. Most NYC condominiums will accept a purchase by a limited liability company, a corporation, or a trust, often with a personal guaranty from the individual behind the entity and a requirement that a named person be identified as the occupant. Most co-ops will not accept an LLC at all. Trust ownership is more commonly permitted in co-ops than LLC ownership, and buildings that allow it typically require the trust beneficiary to be approved as an individual, to sign an occupancy agreement, and to remain personally liable for the maintenance. The disclosure and filing side of entity ownership, including New York's 2019 LLC member disclosure at closing, is covered in buying a NYC apartment through an LLC or trust.
None of this is uniform. Two buildings on the same block can hold opposite positions, and the answer lives in the co-op's transfer policy or the condominium's bylaws, not in a general rule. Read the document before you make the offer. For the mechanics of setting up and funding the entity itself, that is a conversation for your attorney and your accountant, and NYS rules require a broker to give you a list of attorneys to choose from rather than a single name.
The FinCEN reporting rule, and where it stands right now
FinCEN's Residential Real Estate Rule applies to non-financed transfers of residential property to a legal entity or a trust. It expressly reaches transfers of an ownership interest in a cooperative housing corporation, so a co-op share transfer is not outside its scope. Reports were required for closings on or after March 1, 2026.
On March 19, 2026, a federal court in the Eastern District of Texas vacated the rule. FinCEN, with the Department of Justice, has appealed. While that order remains in force, reporting persons are not required to file and are not subject to liability for not filing. Because an appeal is pending, confirm the current status with your attorney at the time of contract rather than relying on where it stood at the time of your search.
What the public record shows after you close
Buyers often assume a co-op is the private option and a condo is the public one. That is only half right. A condo sale produces a recorded deed, and once it is in ACRIS anyone can see the unit, the parties, and the price. A co-op sale produces no deed, because shares are personal property rather than real property, so no deed ever gets recorded.
The privacy stops there. The transfer tax return still gets filed, and it is public. Co-op transfers show up in ACRIS under a real property transfer tax document class rather than a deed, and that filing names the parties and states the consideration. If your goal is to keep a purchase price and a name off a search anyone can run for free, the co-op structure gets you a different document type, not silence. Our guide to searching ACRIS walks through exactly what turns up for each.
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Second homes: who is allowed to leave the apartment empty
If the apartment will not be your primary residence, the structural question becomes a screening question. Many co-ops restrict or prohibit pied-a-terre ownership outright, on the reasoning that a shareholder who is rarely in the building contributes less to it. Condominiums, as a class, are far more accommodating to part-time occupancy, which is a large part of why second-home and international buyers concentrate there.
Buildings that do permit part-time use often attach conditions: the unit cannot sit vacant indefinitely, family use may be restricted to named relatives, and the board may require notice of extended absences. If a second home is the plan, read our pied-a-terre buying guide before you tour. On the tax side, the annual pied-a-terre surcharge was enacted on May 27, 2026 and applies to city fiscal years starting July 1, 2026, with the threshold measured against the Department of Finance valuation rather than the sale price. The pied-a-terre buying guide carries the rate table and the exemption paths. Budget for the taxes that exist, not the ones in the headlines.
The financial test a board applies to an all-cash buyer
Paying cash does not remove you from co-op board review. It changes what the board is measuring. Market practice across NYC co-ops clusters around a debt-to-income ratio in the mid-to-high twenties and post-closing liquidity of roughly one to two years of mortgage and maintenance payments held in reserve after the purchase. Those are conventions rather than statutes, they vary building to building, and plenty of buildings have no written policy at all. Higher-end buildings tend to sit at the stricter end of that range.
Two things surprise wealthy buyers here. First, boards look at liquid, verifiable assets. A balance sheet weighted toward closely held business interests, restricted stock, or illiquid partnership stakes can read as thin to a board even when net worth is very large. Second, income structure matters as much as income size, because variable compensation gets discounted in ways a W-2 salary does not. If your assets are complex, plan for a longer document-gathering runway, and read the full co-op purchase process before you submit anything. Condominiums run an application too, but it is an information exercise attached to a right of first refusal, not a merits review of your finances.
Renting it out later: sublet caps and right of first refusal
Co-op sublet policies are typically written as a formula. A common structure is a required owner-occupancy period of about two years, followed by permission to sublet for a limited number of years within a rolling window, with board approval of each tenant and a sublet fee paid to the corporation. Some buildings cap the total percentage of units that may be sublet at any one time, so approval can depend on a queue rather than on you.
Condominium boards generally cannot block a rental. Most NYC condo bylaws instead give the board a right of first refusal: the board may buy the unit on the same terms rather than approve or reject your tenant. In practice boards rarely exercise it, which is why a condo is the default structure for a buyer who wants the option to hold and rent. If rental flexibility is part of your thesis for the purchase, that difference is not a detail, it is the decision.
Closing math: mansion tax, flip tax, and transfer taxes
The mansion tax applies identically to both structures. It is buyer-paid, starts at 1% on residential purchases of $1M or more, and steps up through progressive brackets to 3.9% at $25M and above, applied to the entire purchase price rather than only the amount over the bracket threshold. Our complete mansion tax guide lays out every tier and the cliff effect at each one.
Where the two structures diverge is on the resale side, and that is a cost you inherit when you buy.
| Cost | Co-op | Condo |
|---|---|---|
| Mansion tax (buyer) | 1% to 3.9% by bracket, $1M and up | Same |
| NYC transfer tax (seller, residential over $500K) | 1.425% | 1.425% |
| NY State transfer tax (seller) | 0.4%, rising to 0.65% at $3M | Same |
| Flip tax on resale | Common. Typically 1% to 3% of price, most often 2%, usually seller-paid | Uncommon. New developments often charge the buyer a capital contribution instead |
| Mortgage recording tax | Not applicable, a co-op loan is not a mortgage on real property | Applies |
On a $3M resale, a 2% co-op flip tax is $60,000 that a comparable condo seller would not pay. On the buy side, the absence of mortgage recording tax on a financed co-op purchase cuts the other way. Run both numbers against your expected hold period rather than assuming one structure is cheaper. The flip tax guide covers how the different formulas are calculated, and the closing cost breakdown shows where each line lands.
Financing flexibility at the top of the market
Co-op corporations set their own maximum financing percentage, and a meaningful share of high-end buildings require substantially more than the standard 20% down. Some permit no financing at all. A condominium leaves the loan question between you and your lender, which is why portfolio lending, cross-collateralized structures, and non-U.S.-citizen borrowing all tend to be easier in a condo. If your purchase depends on a specific loan structure, confirm that the building permits it before you commit, because a co-op board can decline a financing arrangement the lender has already approved.
Which structure fits which buying situation
A condo tends to fit when
- • Title needs to be held by an LLC, a corporation, or certain trusts
- • The apartment will be a second home or used part of the year
- • You want the option to rent it without a board deciding your tenant
- • The buyer or borrower is not a U.S. citizen or has complex financing
- • Assets are large but not easy to document in a board package
A co-op tends to fit when
- • The apartment will be your primary residence for years
- • You want more space per dollar in prewar buildings that trade at a discount to comparable condos
- • Financials are liquid and straightforward to document
- • You want the financial screening the corporation applies to every purchase
- • Financing is modest or the purchase is all cash
The framing that helps most of my clients is this: a condo buys you optionality, and a co-op charges you for it in the form of review, restrictions, and a flip tax on the way out. If you will live there, the co-op discount is real money. If you need the apartment to hold an entity, sit empty for stretches, or produce rent, the condo premium is not a premium at all, it is the price of a structure that permits what you actually plan to do.
Whichever way you go, the answer is in the building's own documents, not in a general rule about co-ops and condos. Get the transfer policy or the bylaws in hand early, and have your attorney and your accountant read the entity and tax pieces before the offer rather than after the contract.
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