Cooperatives & Condominiums
A loan secured by co-op shares and proprietary lease — personal property, not a real property mortgage.
A share loan is a co-op buyer's equivalent of a mortgage. Because co-op shares are PERSONAL PROPERTY (not real property), the loan is secured by the shares and proprietary lease — not by a mortgage on real estate. The lender perfects its security interest by filing a UCC-1 financing statement under Article 9 of the UCC. KEY ADVANTAGE: share loans are EXEMPT from NY mortgage recording tax (which applies only to real property mortgages). Many lenders do not finance co-ops at all, and those that do may have stricter underwriting than conventional mortgage lenders.
Exam Tip
Secured by co-op SHARES (personal property), not real property. EXEMPT from mortgage recording tax. Perfected by filing UCC-1.
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Co-ops & Condos
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NY Real Estate Co-ops and Condos
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