After a long search, you have finally located your dream apartment. In New York, such an apartment is likely to be a cooperative apartment. You have been fortunate enough to obtain your loan commitment. Are you ready to close? No, because you now need approval for your purchase from the board of the cooperative. Such a condition is contained in the form contract for cooperative purchases. This post will discuss what is entailed in obtaining cooperative board approval.
The contract will specify a timeframe for the submission of your board application package. Your attorney should monitor this deadline, along with other deadlines to confirm that you have made the submission within the proper timeframe. It is preferable to work with a professional real estate agent who is familiar with the building or its managing agent, so that the board package is prepared in a manner pleasing to the board. Typical items for submission include financial records such as bank statements, and personal and professional letters of reference, along with the completed board application and credit check authorization. Each building specifies the number of copies required to be submitted. Most buildings will require that the application not be submitted unless it is also accompanied by a loan commitment letter from your lender.
The managing agent will review the application with the building’s interview committee (usually a smaller portion of the board). If such application on its face is not acceptable to the board (usually for financial reasons), they will decline to interview the candidate. This is a wise move, so that the board is not accused of discrimination in the event that the applicant happens to be a member of a protected class, which is not discoverable unless the applicant is met face-to-face. Otherwise, the board will schedule the interview. Potentially during the summer months or holiday season, meetings may occur more sporatically.
Once the interview has been scheduled, an applicant is well-advised to be polite, respectful and demonstrate that she would be an ideal neighbor who follows all building rules. Controversial topics should be avoided. The board may at such point accept or decline the applicant, and is not required to identify the reasons why an applicant is not approved. The board can decline any applicant for any reason, except discriminatory reasons against a member of a protected class.
Boards are within their prerogative to approve an applicant with additional conditions. For instance, a young professional early in her career may be required to deliver a maintenance guaranty from her parents wherein they agree to pay all charges due to the cooperative if the purchaser fails to do so. Likewise, a maintenance escrow may be required wherein several month’s worth of maintenance is held in the cooperative attorney’s trust account, which amount can be drawn if the purchaser fails to pay charges due. In either case, your attorney should negotiate the escrow terms and amounts required, within a written agreement. In addition, a board may have restrictions on pets, even requiring them to attend the board meeting.
Our firm handles numerous cooperative transactions on an annual basis. We are available to monitor deadlines, advise on the board approval process, negotiate any conditional approval documents and attend the closing for the purchase of your dream cooperative apartment.