Few situations in life require you to lay bare your financial health and history in such full-color detail the way buying a co-op does. While it may be stressful and time-consuming to prepare and share all the documents required for evaluation and acceptance, the end result—getting the home of one’s dreams—is almost always worth the effort.
Know What to Expect
When it comes to the delicate task of determining who to accept into a co-op community, board members look at a broad range of factors, but they’re really seeking one core characteristic: “They want to see stability,” says Jacky Teplitzky, a licensed real estate broker with Douglas Elliman in Manhattan. “They want to see that you’ve been in the same job or line of work for a while. If they see you jump from one job to another in different fields, it’s a red flag. It’s not just about funds; it’s about patterns.”
In general, boards will ask applicants for some standard pieces of information. According to attorney Steven Troup, a partner at the law firm of Tarter Krinsky & Drogin LLP, which has offices in New York City and New Jersey, these pieces can include “a credit check, background check, statement of net worth, statement of financial condition, two years of federal tax returns with all schedules, employment verification, landlord verification and business and professional references.”
With regard to tax returns, Teplitzky says some co-ops may require three years’ worth. Again, this is to look for patterns. For example, individuals who work on a commission basis may need to prove that the ebb and flow of their income is not so dramatic that it could leave them in financial jeopardy. “If you make a very small base and the rest is bonuses, boards want to see consistency,” says Teplitzky.
Attorney Steven Sladkus, a partner at the Manhattan-based law firm of Schwartz Sladkus Reich Greenberg Atlas LLP, adds, “Co-ops can ask for whatever they want in the course of making their decision. They want to make sure that a prospective purchaser is not a risk to default on their obligation.” That stability is important to the economic health of the entire co-op—one individual who falls behind in their fees or is unable to pay an assessment can quickly become a burden to the entire co-op community, something that is not fair to their fellow shareholders. With their fiduciary responsibilities, this is a matter of serious consideration for board members.