Price floors for NY coops: how to get around them? (New York: sale, apartments)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I don't understand the above situation. Can't the seller just make a side-agreement with the buyer? I, seller, will hand over the coop to you for the X minimum price that the buyer has set. On the side, however, I, seller, will wire transfer to you the difference between X and what you and I have actually agreed as the price of the coop.
You could probably pull something like that, though it's likely fraud of some sort.
In this case, he could also threaten to just walk away and let the unit get foreclosed. Then they have an unsaleable share AND no maintenance fees coming in.
I don't understand the above situation. Can't the seller just make a side-agreement with the buyer? I, seller, will hand over the coop to you for the X minimum price that the buyer has set. On the side, however, I, seller, will wire transfer to you the difference between X and what you and I have actually agreed as the price of the coop.
Most co-op bylaws require board approval for ANY transaction. Your own children can't inherit your unit without board approval. You would leave yourself open to fraud charges.
Also, The problem with this private scenario is taxes. You can't transfer large sums of money without enormous tax liabilities.
depends on the co-op bylaws.. our kids need no approval to live there even if we dont nor does the board have to approve them inheriting it. spouses and children need no approvals in our building.
it varys from co-op to co-op as per their bylaws as to whether kids need approval to inherit.
I don't understand the above situation. Can't the seller just make a side-agreement with the buyer? I, seller, will hand over the coop to you for the X minimum price that the buyer has set. On the side, however, I, seller, will wire transfer to you the difference between X and what you and I have actually agreed as the price of the coop.
That is the only approach that makes sense. Running aound like a chicken without a head like the article recommends, gathering co-op voters to change bylaws, bank appraisals, etc. is just plain silly and impractical. Might as well say "sue the board in court" which could probably be done with $10,000 and 2 years to waste.
It could work like: You pay $213,000 and I will rebate you $20,000 for "closing costs" and "necessary upgrades."
But the secondary contractual agreement would be done privately. What the Board doesn't know won't hurt it.
Seller might take a $5,000 hit and buyer get a $5,000 windfall to cooperate, but the deal would get done.
People tend to operate sanely unlike some co-op boards (or magazine writers.)
Last edited by Kefir King; 03-18-2012 at 10:24 AM..
And I don't think it would be "fraud" as someone wrote above. It's because these days, it's pretty easy to prepare a derivatives transaction that would achieve the goal described below, while remaining completely legal.
Or how about something simpler than derivatives. I sell the apartment to you for 230,000. Then, on the side, you sell me a peck of corn (which cost you zero cents) for 20,000.
Quote:
Originally Posted by Kefir King
That is the only approach that makes sense. Running aound like a chicken without a head like the article recommends, gathering co-op voters to change bylaws, bank appraisals, etc. is just plain silly and impractical. Might as well say "sue the board in court" which could probably be done with $10,000 and 2 years to waste.
It could work like: You pay $213,000 and I will rebate you $20,000 for "closing costs" and "necessary upgrades."
But the secondary contractual agreement would be done privately. What the Board doesn't know won't hurt it.
Seller might take a $5,000 hit and buyer get a $5,000 windfall to cooperate, but the deal would get done.
People tend to operate sanely unlike some co-op boards (or magazine writers.)
the try to make the sale price look as low as they can and then take money under the table.
flip taxes,transfer taxes ,capital gain taxes etc all benefit showing the sale price as low as possible.
many co-ops have right of first refusal .. get the actual price low enough by working under the table deals with your buyer and the building may snatch it away from you and you really will end up with that low price.
co-ops have no problem doing this as they have lines of credit in place . its alot lot tougher to do in a condo though.
The Board's concern may be to protect the financing of the remaining owners. Appraisals are based on "comps": comparable sale prices for similar units. If some people paid $223K for their units, their mortgage is based on that price. With the traditional 80% guidelines restored, an owner can finance a max of $178,400. Some may have financed more, as some 90% & 95% loans were made, just a couple of years ago! If the prices for the comps drop to $175K, an appraisal will max the 80% available on a re-financing at $140,000. So, the effort to protect remaining owners is done in good faith, despite the efforts of realtors to move properties & lawyers to drag the Board into lengthy lawsuits. Sad for the 10% trying to sell, but a majority of the other 90% probably want the floor.
So, the effort to protect remaining owners is done in good faith
Preserving artificial price supports so that your apartment LOOKS like it is worth more than market price is NEVER done "in good faith."
Preventing someone who needs DESPERATELY to sell from selling does not represent "good faith" but rather good old fashioned bad faith greed.
Good faith would be "I don't want to sell at that price." BAD FAITH is "I won't let YOU sell at that price."
All these maneuvers do is to make sure the market is not allowed to operate, to keep Supply and Demand from getting houses sold at the market price.
I wonder if these provisions have been tested in Court?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
