NYC coop

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drjazz
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NYC coop

Post by drjazz » Sun Jun 18, 2017 9:57 pm

My s/o has been trying to sell her NYC coop for the past 18 months without success. It's a studio on the Upper East Side in a decent building (not as prestigious as the next one on the block which is home to many zillionaires, bigshots, etc) but nice enough. Because it's a studio the price is on the lower end for the neighborhood. The problem is that the coop board, which has absolute discretion on buyers, has very high minimum net worth requirements which eliminate most buyers in her price range; they also will not approve a sale for less than what they consider to be an appropriate price. They also frown on allowing a parent to cosign for a younger person who might have adequate income but has not yet had time to reach their net worth minimum. She has already switched real estate agents once. She and her ex husband acquired it for use as a pied-a-terre with no intention to use it for full time living; she received it as her divorce settlement and has been living there since. (I think it's ironic that if she were to apply to buy in the building in her current circumstances, they would never accept her on financial grounds!) She really wants to get out of New York. I doubt that there are any easy answers to what looks like a roach motel (albeit a ritzy one) situation to me, but I would appreciate any helpful suggestions from anyone who might have experience with similar situations.

runner3081
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Re: NYC coop

Post by runner3081 » Sun Jun 18, 2017 10:27 pm

If she is selling to move in with you, maybe change those plans and live there?

Also, what about renting? Do the CC&R's prevent that?

I am a little shocked to see that the board can approve/deny buyers. Seems like it opens up the door for discrimination and fair housing laws.

How is her credit? If it is not great, could always walk, assuming there is a mortgage.

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Pajamas
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Re: NYC coop

Post by Pajamas » Mon Jun 19, 2017 12:19 am

If the net worth requirements are unrealistic, she could talk to the board and explain that their requirements may be appropriate for larger apartments, it's just not realistic for studios because people who can afford them by the board's standards don't want them. The key is for her to let them know that it is going to drive down the prices of those apartments and act as a drag on the whole building. If they understand how it could affect all of the shareholders financially, they might take another look at their requirements.

She might try to sell the studio to the shareholder of an adjacent apartment to combine with their own. The board might be more flexible with that.

She could also lower the asking price. Unless the board is deliberately trying to obstruct the sale, that may work and may be the only solution if the board stands firm.

Young adults whose parents buy their apartments for them because they aren't financially able to do so themselves have caused a disproportionate share of problems in my building. I can definitely understand why the board won't allow it.

denovo
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Re: NYC coop

Post by denovo » Mon Jun 19, 2017 1:30 am

runner3081 wrote:
I am a little shocked to see that the board can approve/deny buyers. Seems like it opens up the door for discrimination and fair housing laws.
Common in co-ops, and you see a lot of those in NYC

mindboggling
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Re: NYC coop

Post by mindboggling » Mon Jun 19, 2017 3:34 am

When you buy a co-op apartment you are not actually buying real estate. You are buying shares in the corporation that owns the building. By virtue of owning the shares you are entitled to a proprietary lease on the apartment. Technically, it's not a real estate transaction. Whether to sell you the shares or not is considered a private business decision by the corporation. Board decisions are rarely overturned. One would have to prove, and I mean prove, that one's civil rights were violated. Boards are very experienced at circumventing this situation. Boards like to see apartments sell for at least the "market" value. Once a sale goes through and the sale price becomes public, it affects the future sale price of other apartments in the building.

Just last week I sold a co-op apartment that I owned in one of the outer boroughs. It took about one year, and my first buyer was rejected. Of course, not being in Manhattan, the board's requirements were less stringent!
In broken mathematics We estimate our prize, --Emily Dickinson

gips
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Re: NYC coop

Post by gips » Mon Jun 19, 2017 8:43 am

I agree she needs to meet with the board, a reasonable compromise is to adjust the net worth requirement based on the sales price of the coop. Unfortunately, the net worth requirement may be in place to "keep the riff raff out". we had a coop we couldn't sell, we were able to relocate by subletting the coop for many years. Is that an option for her?

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Rob5TCP
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Re: NYC coop

Post by Rob5TCP » Mon Jun 19, 2017 9:17 am

Having owned a co-op at 5 TCP, I had first had experience. It helped that I was on the original steering committee and the board president was on my floor. Requirements vary by co-op and can be quite open or horribly restrictive. The board does have WAY too much power (and sometimes it really goes to their heads).

Do you have anyone who is friendly with a member or the president of the board?
Lawsuits are pretty ineffective (as mentioned).
Renting out is the option if the board permits - and the restrictions aren't too severe there as well.

fishmonger
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Re: NYC coop

Post by fishmonger » Mon Jun 19, 2017 9:21 am

denovo wrote:
runner3081 wrote:
I am a little shocked to see that the board can approve/deny buyers. Seems like it opens up the door for discrimination and fair housing laws.
Common in co-ops, and you see a lot of those in NYC
+1. Saw this in action when a client of mine purchased a unit from a older relative at a "price that could not be beat." Buyer was handy and put a ton of effort into fixing up and modernizing a place that had not changed since the 70s. On paper, it looked like a slam dunk. He had two qualified buyers get rejected by the board for no logical reason. He still made a decent profit, but it took about 6 months longer than it should have

adamthesmythe
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Re: NYC coop

Post by adamthesmythe » Mon Jun 19, 2017 10:13 am

> I am a little shocked to see that the board can approve/deny buyers.

Apparently you are unfamiliar with NYC coops. This is a well-known situation.

I have no good advice for OP. I do recommend than anyone interested in buying into a coop understand the restrictions and think about it carefully.

In another northeastern city, I once looked at a coop that had a similar sort of issue- attractive price but difficult to satisfy income and asset restrictions.

runner3081
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Re: NYC coop

Post by runner3081 » Mon Jun 19, 2017 12:54 pm

denovo wrote:
runner3081 wrote:
I am a little shocked to see that the board can approve/deny buyers. Seems like it opens up the door for discrimination and fair housing laws.
Common in co-ops, and you see a lot of those in NYC
Wow.. I am a west coast guy, never heard of this sort of thing. I had incorrectly assumed it was operated more like an HOA.

I will add this next to "timeshare" on things I will never buy :)

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Phineas J. Whoopee
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Re: NYC coop

Post by Phineas J. Whoopee » Mon Jun 19, 2017 12:58 pm

Because of the legal implications, noted above, of a co-op unit really being a long-term lease plus non-public shares, which are personal property, the sale of which can be restricted, as opposed to real property where the owner is protected against most restrictions, a co-op unit commands a lower price than an equivalent condo. If one means to live there a long time, the lower cost to buy can be worth the potential sales difficulties down the road.
PJW

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Rob5TCP
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Re: NYC coop

Post by Rob5TCP » Mon Jun 19, 2017 2:40 pm

Could you try to contact someone on the board to see if they have a "recommended" real estate agent. I am not saying there are kickbacks - but I've heard of worse. They would be more familiar and bring people around who can pass the board. Or they may have some influence with people on the board.

Good luck. I used an agent recommended by a friend who was on the board and was sold in 6 weeks. But, that was a different time a number of years ago.

Good Listener
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Re: NYC coop

Post by Good Listener » Mon Jun 19, 2017 2:56 pm

runner3081 wrote:If she is selling to move in with you, maybe change those plans and live there?

Also, what about renting? Do the CC&R's prevent that?

I am a little shocked to see that the board can approve/deny buyers. Seems like it opens up the door for discrimination and fair housing laws.

How is her credit? If it is not great, could always walk, assuming there is a mortgage.
Runner, I you are shocked, you've never been in a coop !!!! I owned 2 in Manhattan at different times. I would never again. Boards vary but NEVER want to deal with somebody unable to pay the maintenance as it leads to costs for all. I have seen some where they want 50% down and 10x the maintenance innings without blinking.

Mom, a buyer will appear when the price is low enough. Investors know all this. Don't appear desperate and whatever attorney recommended your daughter take the coop in the settlement... :twisted:

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