Co-ops in a Nutshell
Buying a co-op in New York City can be a daunting experience. However, if you are prepared and understand the process, it can alleviate some of the anxiety often associated with purchasing a co-op. There are a few things to keep in mind, depending on whether you are a buyer or a seller of a co-op.
As someone who is looking to sell their co-op, you need to have certain documents ready. Once you accept the offer, the buyer’s attorney will normally ask to see the last 3 years of co-op financials, the bylaws, and the offering plan with amendments. As the co-op owner, you should have current financials and the offering plan from when you purchased it. If not then definitely get this information together from the management office. Financials should be made readily available to the owners but you may be required to pay a fee for the offering plan. In addition, if you have a mortgage on the co-op, you will be required to request the collateral documents, normally the original stock certificates and the proprietary lease from your mortgage lender before closing. This can slow down the closing process. You need to account for this time, which could be several weeks. It could be sooner but you must plan for up to 4 additional weeks. If on the other hand you do not have a loan and have the original stock certificate and the proprietary lease with you, then this additional time will not be required.
As a buyer of a co-op in New York City, your contract of sale will be contingent on Board approval. Further, if you are financing the purchase, of course, you must be approved for a loan from a lender that provides such loans. The Board approval process can take some time. Often the application process requires a loan commitment to be submitted with it, which can delay the approval process. Some co-op Boards meet once a month and if you miss the timeline for that meeting, then you must wait another whole month. Other co-ops accept applications on a rolling basis. In either case, co-op closing is a much longer period than buying a single-family home.
Once you adjust your expectations and understand the process, you can have some piece of mind and look forward to a successful closing.
If you have any questions about this process, give us a call at 516-570-4016.