HDFC Co-ops

December 27, 2017 | By Charles Botensten

Q. I am a licensed real estate agent and I have been contacted by the seller of an “HDFC” co-op, who would like my real estate brokerage company to list his property.  What is an HDFC co-op and what should I be aware of?

A. “HDFC” is an acronym for Housing Development Fund Corporation.  HDFCs are New York State corporations incorporated under the New York State Business Corporation Law and governed by the New York State Private Housing Finance Law.  Tenant groups, which are comprised of low income individuals and  are interested in converting their buildings into private co-ops, can organize themselves as an HDFC and take advantage of certain benefits like full or partial exemptions from real estate taxes for as many as 40 years.  An HDFC co-op is a unit in a co-op where the co-op corporation is established as an HDFC.  There are over 1,000 HDFC projects in New York City.

The most important aspect of HDFC co-ops that a real estate agent should be aware of is the income eligibility requirements established by the HDFC co-op.  A purchaser must meet these income requirements in order to be eligible to purchase in the HDFC co-op.  The income requirements will vary with each HDFC and depend on the definition of “low income” used in the certificate of incorporation of the HDFC co-op.  Some HDFCs co-ops use Section 576 of the New York State Private Housing Law which defines low income as households of two dependents with incomes not exceeding six times the total housing cost (for households with three or more dependents, the income cannot exceed seven times the total housing cost). Some HDFC co-ops define low income as a percentage of the average median income as defined by the U.S. Department of Housing and Urban Development. 

Real estate agents should advise the purchaser and seller to speak to their respective attorneys about the income eligibility requirements for HDFC co-ops and how such requirements will affect the transaction.

Important Tip:   An HDFC co-op is often mistaken for an “HDC” co-op. As mentioned above, an HDFC is a form of corporate entity; it is neither a New York State nor a New York City agency. On the other hand, an HDC co-op is a unit financed by the Housing Development Corporation (HDC), a New York City agency that has financed many affordable co-op developments.

The Legal Line Question by:
Neil B. Garfinkel
REBNY Broker Counsel

Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP