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My mother is moving to the city and I will be buying her an apartment because she doesn't have the $$$ to do it on her own. We've been unsuccessful in finding a suitable condo in the neighborhood she's interested in so we've started looking at co-ops. We've found a apartment in a co-op building that she likes and I will probably make an offer.
Co-op boards like to review the buyers credit history and financial status which I am unwilling to disclose. However, what I will do is buy the apartment with cash and I'd put money in escrow to cover several years of maintenance fees. Is a co-op board likely to approve this or am I wasting my time? I'll talk with my broker and attorney tomorrow but I just wanted to get your perspective.
I don't think they will go for this. Why don't you look for a sponsor unit in a coop building? Are you familiar with that term? There's a long explanation but basically if you buy a sponsor unit, you do not have to go through the board at all and they never see your finances. Not all buildings have any sponsor units left so it may take longer to locate one in your mother's favorite neighborhood, but I highly doubt any coop board will just let you off without going through the same procedure everyone else (except sponsor sales) go through.
Yes, I agree with Henna, a sponsor unit is the only way you can accomplish that with a co-op. You could see what's available in a condo, though it might be a tad more expensive than the co-op.
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My friend just got rejected from a lower 5th Avenue co-op. He is 30, owns his own finance company, and has liquid cash investments of 4x the purchase price (which is signifant).
His broker said the board is notoriously picky and likely rejected him because of his young age and lack of NYC pedigree (being a self-made millionaire from the Midwest). But you never really know, as they're not required to give a reason for rejection.
So, I guess you never know, but co-op boards love their power trip and could possibly reject your app just because they feel like it.
Nope, even if you pay in cash, they ask for financial disclosure. There are buildings on Park and Fifth Avenues that REQUIRE cash (no mortgages permitted) and they, too, require financial disclosure.
The reason they want to see the financials is because there are LOTS of people who receive outrageous ONE TIME bonuses. They can buy the apartment, but don't have the resources for assessments, increases in maintenance, etc.
Further, many co-ops REQUIRE that the actual shareholder occupy the unit. Even if it's your mother. And she will have to be on the proprietary lease to do that. They won't be happy if it's a one-bedroom and you've got your mother on the lease, because their next question will be: where is everyone going to sleep? See where I'm going ?
You might have better luck with a condo. They're not as picky.
Condominiums don't review finances - that's the owner's problem, not the condominium's. HOWEVER, there is no control over who sublets to whom, and if there is a financial problem with the building, it's dicier for the owners than it is in a co-op.
I bought a sponsor co-op and although I didn't have to be approved by the board the sponsor made me submit to a pretty rigorous financial and credit checking process.Not being "subject to board approval" does not mean not being subject to financial and credit scrutiny.
I would say you are probably going to have to find a condo.Paying all cash means nothing and a lot of co-ops require it along with a financial check.They not only want to see that you have resources,they want to see how deep they are and WHERE THEY COME FROM.
Co-op boards are not on a "power trip" as someone mentioned above.They are protecting their own and every other shareholders investment in the building and much of what has unfolded in the last year or so proves that it is a wise strategy.Personally,especially given what I have seen recently,I wouldn't buy into a condo.They are having many more foreclosures than co-ops and you might think it doesn't effect you in a condo but if a unit in your building shows up on the realty trac foreclosure list you will find out that it does.
I doubt you will accomplish this with any condo either. Our condo requires a full financial statement and employment history, and our management company peforms (at the buyer's expense) a background and credit check. With a condo purchase you will not be subject to questioning and prodding over what is in your financials or employment history by some coop board member with nothing better to do, but you still are likely to be required to lay out the information (unless, as indicated above, you buy from the sponsor).
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