A Housing Development Fund Company (HDFC) cooperative is a limited equity cooperative incorporated under Article XI of the Private Housing Finance Law. These types of cooperatives are typically sponsored by an organization known as the Urban Homesteading Assistance Board (UHAB). UHAB assists in the process of turning over City owned buildings to their residents and creating a cooperative.
HDFC Cooperatives are intended for persons of low income. HDFCs receive financial assistance, in the form of monetary grants, allowing the buildings to offer co-ops for sale to buyers at reduced prices. As a result, these co-ops have income rules that apply to prospective shareholders as well as a cap on the resale price of the co-op apartment when a shareholder or the HDFC sells an apartment to a prospective buyer. The income restrictions will vary on a case-by-case basis with different buildings; however, the prospective buyer’s income in all cases in which UHAB is providing financial assistance to the cooperative cannot exceed 120% of the Area Median Income. If a co-op is sold to a buyer whose income exceeds the income restrictions, the buyer will be forced to pay back the amount of money corresponding to UHAB’s monetary grant for that particular co-op apartment, ultimately resulting in no profit to the seller.
Purchase prices are unique to each building and typically vary in accordance with the scope of renovations performed on that building as well as the building’s mortgage. In all cases, the proprietary lease and by-laws, along with any applicable regulatory agreements, should be consulted to determine the actual income restrictions and re-sale policies. As there are a great deal of variations among the restrictions and rules that are applicable to the sale, re-sale, and/or purchase of HDFC co-op apartments, Boards and sellers should contact counsel for guidance through the sale process.