Understanding Resale

Here are some commonly asked questions about resale policies and the legal restictions on HDFCs.

Understanding Resale: Part I

When you purchased shares in your Housing Development Fund Corporation (HDFC),
you and your neighbors became the cooperative owners of your building. With
ownership comes the responsibility of managing and maintaining the HDFC. Part of that
responsibility is keeping your building affordable for yourselves and other households
who will move in after you. In this issue and upcoming issues of Member News, UHAB
will feature articles to help you understand your Resale Policy.

What is so special about my HDFC?

An HDFC is a special purpose housing corporation incorporated under New York State
law. By forming an HDFC to create your co-op, HPD is able to sell you your building at
a fixed low price (usually $250/unit) and provide other benefits including the rehab of
your building and a reduction in your real estate taxes. In the past 27 years, over 1,000
HDFCs have been created to provide secure and affordable housing for nearly 25,000
residents. Today, as rents and real estate values rise, affordable housing is becoming
extinct. The HDFC co-ops will remain an incredible resource of affordable housing for
communities around the City only if each HDFC is careful about following the resale
rules in your legal documents and the HDFC law.

What is the difference between a regular business corporation and an HDFC?

The biggest is the purpose. Regular business corporations are created to make money for
their shareholders. HDFCs are created to provide housing “for persons of low income”
which means that both the monthly charges (rents or maintenance) and the sales price for
apartments must be kept affordable. In exchange, the City has helped by rehabbing your
building, your taxes are reduced by the DAMP Tax Cap, HDFCs are exempt from city
and state corporate taxes, TILs and HDFCs get free training and assistance from UHAB
and others and households with very low incomes were able to get Section 8 rent
subsidies at the time you bought your building. HDFCs are also eligible for specific
programs like Tax Relief, low cost repair loans and DEP Forgiveness programs.

What happens when our resale restrictions expire?

Your HDFC’s rules regarding the resale and transfer of apartme nts are found in three of
your legal documents: your Certificate of Incorporation (in Article X), your By- laws, and
your Proprietary Lease. Article X of your Articles of Incorporation details the resale
restrictions imposed by HPD. These restrictions inc lude the definition of low income for
who can purchase shares in the co-op and how profit is split between the co-op and the
outgoing shareholder. Depending on when the building was purchased, it’s likely that this
initial policy has expired. After that time you can choose to re-adopt the old definitions
and income guidelines or develop new ones. However, even when the resale restrictions
expire, an HDFC always will be an HDFC--the purpose of an HDFC never expires.
HDFCs are always required to provide affordable housing to low income families.