The Quick Read: On a co-op, recording cost barely moves with loan size, because the loan is secured by shares and a proprietary lease rather than a recorded mortgage, so the usual charge is a small flat UCC filing fee instead of a percentage of the cash-out. That is the opposite of a condo or a house in a state that taxes mortgages. Everything else on the closing statement is a different category of cost.
- A co-op share loan is not a recorded mortgage, so there is usually no percentage-based recording tax to scale with your loan amount.
- The recording-type charge is generally a flat UCC-1 filing fee, and the fee varies by filing office.
- A CEMA (a document that trims recording tax on a recorded mortgage) has nothing to reduce on a co-op share loan.
- On an investment property, cash-out leverage tops out around 75% LTV on most files in the network, and rental coverage still has to clear the lender’s test.
- Whether the building allows rentals decides far more than the recording line does.
Why a Co-Op Has No Recorded Mortgage
A co-op owner does not hold a deed. You own shares in a corporation plus a proprietary lease that gives you the right to occupy a specific unit. The law treats that package as personal property, not real property, so there is nothing for a lender to record a traditional mortgage against.
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As Andelsman Law explains, the lender instead takes a security interest in the shares, an assignment of the proprietary lease, and a recognition agreement signed by the co-op corporation. The lender then files a UCC-1 financing statement. That filing tells other creditors the lender has a claim on the shares.
Here is why that matters for cost. In New York, the main co-op market, the mortgage recording tax attaches to recording a mortgage on real property. A co-op share loan has no mortgage to record, so the tax generally does not apply. Nacmias Law adds that a co-op refinance records nothing against real property, and that transfer taxes do not apply because no conveyance occurs.
Do not stretch that rule to the whole country. It is a New York outcome. Other states may classify a co-op share loan differently, and that is a question for the title agent or closing attorney in your state.
Key Terms Defined
Co-op share loan: A loan secured by your shares in the cooperative corporation and your proprietary lease, not by a deed.
Proprietary lease: The long-term lease that gives a shareholder the right to occupy a specific unit.
UCC-1 financing statement: A public filing that tells other creditors a lender holds a claim on personal property such as co-op shares.
Recognition agreement: A three-party document among the co-op, the borrower, and the lender, in which the co-op acknowledges the lender’s interest.
Mortgage recording tax: A tax some states charge, as a percentage of the loan, when a mortgage on real property is recorded.
CEMA: A consolidation agreement used on real-property refinances to reduce recording tax on a recorded mortgage.
DSCR: Debt service coverage ratio, meaning the property’s rent used for lender review divided by its monthly obligation.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly obligation the rent is measured against.
Cash-out refinance: A new loan that pays off the old one and returns the difference to you, after costs.
Co-Op DSCR Cash-Out by Loan Amount: What the Costs Look Like
The cleanest way to see the difference is to put a flat filing next to a percentage tax at three loan sizes. The figures below are illustrative arithmetic, not quotes. The condo column uses New York City rates, which a real-estate industry guide puts at 1.8% under $500,000 and 1.925% at $500,000 or more. That same guide notes these rates do not apply to co-ops.
| Loan amount | NYC condo or house (illustrative) | NYC co-op share loan |
|---|---|---|
| $250,000 | About $4,500 in recording tax | Flat UCC-1 filing, roughly $40-$50 |
| $500,000 | About $9,625 in recording tax | Same flat filing |
| $1,000,000 | About $19,250 in recording tax | Same flat filing |
The UCC-1 range comes from a practitioner guide to New York co-op costs. Treat it as an example, not a national number. Filing offices set their own flat fees, and they differ widely. The Wake County Register of Deeds lists a UCC-1 at $38, or $45 above two pages. The California Secretary of State lists $5 for an online UCC-1 and $10 or $20 on paper, depending on page count.
Those are two examples from places that are not co-op markets. They show the shape of the cost: tens of dollars, not thousands, and no link to loan size.
The table leaves out the costs that actually take cash at closing. Attorney fees, bank-counsel fees, co-op board or managing-agent charges for the recognition agreement, and transfer-agent fees all belong to a co-op refinance. None of them are recording costs, and none have a published national figure. Get them itemized in writing before you compare quotes.
How a Co-Op Cash-Out Moves Through Underwriting
Underwriting a co-op cash-out runs on two tracks at once. One track tests the property and your equity. The other tests the collateral package, which is where co-ops differ from every other property type.
Step 1: The rent-versus-payment test. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. The ratio compares rent to PITIA only. On a co-op, the monthly maintenance charge takes the place of much of what a house owner pays separately, and how a lender folds it into the coverage math is decided program by program. Ask before you assume. Across the wholesale network, 1.00 is where many select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capex all sit outside the calculation.
Step 2: The equity test. Cash-out on an investment property tops out around 75% LTV on most files in the network, and lenders generally want about 6 months of ownership before they will do it. Your cash-out amount depends on that ceiling, the payoff of the existing loan, reserves, and costs. It is not a guaranteed figure. Loans run up to $3,000,000 on standard programs, and files above $1,500,000 typically step up to about 9 months of reserves instead of the usual 6.
Step 3: The credit and reserve test. A 620 score is a floor in parts of the network, most programs want around 660, and 700 or higher opens the strongest leverage tiers. Reserves commonly run about 6 months of PITIA, though they vary by lender, leverage, and loan size.
Step 4: The collateral package. Here the co-op diverges. The lender collects the share certificate, a stock power, the proprietary lease and its assignment, and a security agreement. Berkman Henoch lists the same file contents and calls a co-op personalty. The documents are signed in blank so a buyer at foreclosure can take the shares and the lease.
Step 5: The recognition agreement. The co-op acknowledges the lender’s interest and agrees to notify the lender of maintenance defaults. According to Adam Leitman Bailey, these agreements also require notice to the lender if the borrower seeks to refinance, sublease, take a second loan, or sell. Nacmias Law notes that most co-op boards use a standard form, and that a board that will not sign can stop the financing.
Step 6: The UCC filings. The new lender files a UCC-1. The prior lender’s filing has to be terminated, and a missing termination is a problem Andelsman flags in refinances. The termination is a separate filing with its own small fee.
Notice what never appears in these steps: a loan-size multiplier on the recording line.
Where the General Rule Breaks
The flat-fee result is a New York pattern. Three edge cases show why you should not carry it elsewhere.
Other states. Several states charge a mortgage recording or intangible tax. How each state treats a co-op share loan is a separate question from how it treats a standard mortgage. If your co-op sits outside New York, the right move is to ask the title agent for a written fee estimate and not assume a number.
Florida. A real-property mortgage there carries documentary stamp tax of $0.35 per $100 plus an intangible tax of $2 per $1,000, roughly $5.50 per $1,000 combined, according to a Florida title firm. As illustrative arithmetic, that is about $1,375 on a $250,000 loan and $2,750 on $500,000. The same firm says a new refinance mortgage can trigger the intangible tax on the full principal, while other structures that use an assignment of the existing note can change the result. Those numbers describe a real-property mortgage, not a co-op share loan. For the full Florida picture, see Lendmire’s piece How Much Florida Doc Stamps Add to a DSCR Cash-Out by Loan Amount.
Georgia’s cap. Loan size can matter indirectly even where a tax exists. Atlanta Title Company lists Georgia’s intangible tax at $1.50 per $500, capped at $25,000 per note. Past the cap, a larger loan stops adding tax. That is a mortgage-tax rule again, not a co-op rule.
One more correction. The rule that nothing scales is not the same as a cheap closing. Attorney, board, and agent charges can add up, and they follow the building, not your loan amount.
Why a CEMA Does Nothing for a Co-Op
Many refinance borrowers hear that a CEMA can cut recording costs, and that is true on a condo or a house. A CEMA works by consolidating an existing recorded mortgage with the new one, so tax applies only to the new money.
A co-op has no recorded mortgage to consolidate. Nacmias Law states plainly that a co-op refinance replaces the outgoing lender’s UCC filing and has no consolidation document. If a quote for your co-op cash-out lists a CEMA, ask what it is for. To see where the savings do apply, read Lendmire’s piece How Much a CEMA Cuts Recording Costs on a DSCR Cash-Out by Loan Size.
The Gate That Matters More Than Recording
Before you model a single closing cost, ask whether the building lets you rent the unit. That question decides whether the co-op qualifies as an income asset at all.
Most co-ops restrict subletting. Brick Underground reports typical limits of one to two years within a five-to-seven-year window, along with board approval and a fee. Those are examples of how tight the rules run, and each building sets its own.
A DSCR loan is built on rent. If the proprietary lease or house rules cap how long you can sublet, the rent a lender can count may be limited or unavailable, regardless of how strong the number looks on paper. Eligibility of co-ops, and how a given building’s rental rules fit a program, is a lender-by-lender question. Lenders in the network review it file by file.
A few property types never make it that far. Manufactured homes, log homes, and barndominiums are not offered through the network’s DSCR programs, and that holds whether the title is a deed or shares.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
What the Decision Looks Like in Practice
Picture two investors, each pulling cash out at the same loan amount. One owns a condo in a state that taxes mortgages by percentage. The other owns a co-op in New York. The condo owner’s recording cost climbs as the loan climbs. The co-op owner’s filing fee does not, so a bigger cash-out costs about the same to record. Both still face the same leverage ceiling, the same reserve rules, and the same coverage test.
So the practical decision rarely turns on recording. It turns on four questions:
1. Does the building allow rentals long enough to support the rent you plan to use?
2. Will the board sign the recognition agreement without friction?
3. Does the file clear coverage and the 75% cash-out ceiling with room to spare?
4. Which of the closing charges are flat, and which depend on the lender or the attorney?
Reading the closing statement helps with the fourth. If a line labeled recording tax appears on a co-op share loan in New York, ask what it is. If it is a UCC filing, expect tens of dollars. If a CEMA charge appears, ask why. Anything that scales with loan size on a co-op deserves an explanation in writing.
Brokers see a recurring pattern on co-op-style files: the cost surprises come from professional fees and board requirements, not from recording. Getting those fees itemized early, and asking the building about its rental rules before the file is built, prevents most of the trouble.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
For the broader picture of how these loans work, the complete DSCR loans guide covers qualification, leverage, and structure in one place.
Frequently Asked Questions
Do co-ops pay a mortgage recording tax?
In New York, generally no. A co-op share loan has no recorded mortgage, so the tax that attaches to recording a mortgage does not apply, according to Andelsman Law. Other states may treat co-op loans differently, so confirm with the title agent in your state.
Does a bigger cash-out raise my recording cost on a co-op?
Usually not. The recording-type charge is a flat UCC-1 filing fee, not a percentage of the loan. A $250,000 loan and a $1,000,000 loan carry about the same filing cost. What can rise with size is lender-side underwriting, such as higher reserve expectations above $1,500,000.
Can I use a CEMA to cut costs on a co-op refinance?
No. A CEMA reduces tax on a recorded mortgage, and a co-op has none to consolidate. Ask any provider who quotes one what it is meant to accomplish.
Can closing costs be rolled into a DSCR cash-out?
On many files, some costs can be financed within the new loan, but that reduces your net cash and still has to fit under the 75% LTV ceiling on an investment-property cash-out. Lender guidelines decide which costs qualify.
Does it matter whether the co-op allows rentals?
Yes, more than recording does. Sublet limits and board approval can restrict the rent a lender is able to count. Confirm the building’s rules, and ask your broker whether a given lender will review a co-op at all.
Next Step
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. As a mortgage broker, Lendmire arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. Every file is reviewed individually and nothing here is a commitment to lend.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
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References
1. Andelsman Law: Does Refinancing a Co-Op Require a CEMA?
2. Nacmias Law: Co-Op and Condo Refinance and CEMA
3. Hauseit: NYC Mortgage Recording Tax
4. Help New York: NYC Mortgage Recording Tax and Co-Ops
5. Wake County Register of Deeds: UCC Information
6. California Secretary of State: UCC Fee Schedule
7. Berkman Henoch Peterson & Peddy: Explaining Co-Ops
8. Adam Leitman Bailey, P.C.: Transfer Agents
9. Nacmias Law: Recognition Agreement Glossary Entry
10. Atlantic Title Firm: Florida Intangible Tax Calculator
11. Atlanta Title Company: Georgia Mortgage Intangible Tax Calculator
12. Brick Underground: Sublet Restrictions in a Co-Op vs Condo
This article is part of Lendmire’s investment property cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Get an Investment Property HELOC Vested in an LLC · How to Get a HELOC Behind a DSCR Loan When Banks Decline · Can an LLC-Owned Rental DSCR Cash-Out With No Seasoning?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.