Homebuyers in New York City may be presented with the opportunity to purchase a “sponsor unit,” a type of property unique to New York City real estate. At the most basic level, “a sponsor unit is an apartment that has never been sold” before. However, this term can have a different meaning depending on whether the unit is in a condo or co-op building. Before choosing to do so, buyers should understand what sponsor units are, along with the advantages and disadvantages of purchasing one.
In a condo building, a sponsor unit is being sold directly by the developer. Sometimes these are units in a brand-new building, or they may be units that the developer itself rented out. For many NYC homebuyers, the opportunity to purchase a unit that has never been lived in is a huge bonus. However, in the competitive NYC real estate market, condo sponsor units may even be sold before the building is completed.
In a co-op building, sponsor units are either being sold by the original owner or have been converted from a rental by the co-op corporation. In either circumstance, co-op sponsor units are often in original condition meaning a buyer may need to make significant renovations. Purchasing a co-op sponsor units may mean you’re not beholden to the same rules as shareholders in the co-op, including the sometimes-burdensome board approval process. However, there may be significantly higher closing costs and more complicated legal issues. Before purchasing a co-op sponsor unit, be sure to have an experienced real estate attorney view all the materials in the transaction.
 Erika Riley, What Is a Sponsor Unit in NYC Real Estate?, Street Easy, (July 28, 2021), https://streeteasy.com/blog/what-is-a-sponsor-unit/#ib-toc-anchor-1.
 Hannah Frishberg, What Is a Sponsor Unit and Why Does It Matter?, Brownstoner, (July 8, 2016), https://www.brownstoner.com/real-estate-market/sponsor-unit-co-op-building-definition-mortgage/
 Riley, supra note 1.
 Victoria Alexander, What Is a Sponsor Unit?, Realty Collective , (June 22, 2020), https://realtycollective.com/what-is-a-sponsor-unit-2/
 Frishberg, supra note 4.
 Alexander, supra note 9.