Expediting the Co-op Application Process What Could Be Done to Make the Review Go Faster?

It often takes as many as 30 or even 45 days before a final decision on a co-op application is rendered.(iStock.com)

The co-op application process is one of rigor and induced anxiety, whereby aspiring shareholders are scrutinized not only for their finances, but their character and demeanor as well. The length of the review varies by association, but it often takes as many as 30 or even 45 days before a final decision is rendered.

Specifically why the review process needs to be this involved is well-established: a board is trying to find a qualified candidate that, at the very least, will be able to adhere to the established (and potentially extensive) house rules and bylaws while being financially reliable. And ideally, the personality of the new shareholder will gel with the existing residents, such that they'll integrate well and become a valuable member of the community. Assuring all of this is no small feat.

With that in mind, are there external or internal factors that can motivate a board to expedite the review of an application? Political ramifications? Market concerns? A rash of shareholders looking to sell simultaneously? The Cooperator reached out to several property managers in order to ascertain what it may take – if anything – for a board to pick up the pace.

Supply and Demand

One factor that tends to render the application process a fixed one is that, for New York City co-ops, the demand for residential real estate is almost always higher than the supply, even when the market is in a relative downturn.

“People applying is the least of our problems,” admits Abdullah Fersen, CEO of Newgent Property Management in Yonkers. “Even around 2008 [during the financial crisis], value, especially in Manhattan, went down 8-10 percent, but this had little effect on demand. People expressed desire to relocate, but that still didn't really affect the process. Manhattan has always proved to be very strong in regard to having strict boards that respect the application system, and even during tough times from a real estate sales standpoint, people were still responsive.”

Peter von Simson, CEO of New Bedford Management in Manhattan, explains that, in his experience, when multiple sales applications are submitted over a short period of time, they try and schedule several interviews with the board on the same night. Barring that, they will split up the board such that different members can interview different candidates and share their reviews, thus ensuring everyone is well-tended-to without cutting any corners. “I have never seen a board curtail the process due to the volume of applications,” he notes.

And Stephen Elbaz, founder and president of Esquire Management Corp. in Brooklyn, notes that, the few times he's known a board to fast-track their usual routine, it hasn't correlated with the real estate market at all. “It's when an outgoing shareholder is a nightmare; the kind of person that sues all the time, takes up three parking spaces, or their dog pees in the hallway,” he says. “Stuff so offensive that the board just can't wait to get the person out. That, or when the friend of a board member or someone with a relationship to the board wants to buy in, that can get a fast-track.”

Costs Versus Benefits

While co-ops may not be spurned to hastily meet with applicants, there can be a downside to taking too much time with reviews.

“Buildings don't want to get a reputation for being slow with the process,” warns Elbaz. “That can hurt apartment values in general, because brokers want to make deals, and will thus steer buyers away from buildings where boards are agonizingly slow toward quicker associations. Which is why I encourage my boards to move a little faster, the better to cultivate a reputation as a good building where deals move quickly. That more than anything else helps values, because it encourages the brokerage community to deal in that property.”

And Fersen adds that his company will prepare all requisite application or questionnaire paperwork ahead of time, such that they are ready and automated when a broker or the board calls for a sale. “This way, our turnaround as management is probably one of the fastest in the city,” he says.

Structural Issues

Finally, in response to the above, Jeffrey M. Heidings, president of Siren Management in Manhattan, explains that the very nature of a co-op is such that all of the shares are accounted for at any given time, even if some shareholders opt to leave their units empty; or in a new construction, some shares are still held by the developer. To this effect, there is never necessarily a 'vacancy' that urgently needs be filled, and there is thus less impetus to speed through an approval process, which is why those interviewed consistently attest to market fluctuations having little impact.

“The boards I work with treat every applicant the same,” concludes Josh Koppel, president of H.S.C. Management Corp. in Yonkers. “And honestly, I don't think that a board should be concerned with fast-tracking approvals. At the end of the day, it's all about protecting the co-op, and, as such, a board should not be so willing to change its procedures.”

Mike Odenthal is a staff writer at The Cooperator.

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  • At my co-op, most of the shareholders would laugh at this article. The majority of the shareholders expect rubber stamp approvals of any buyer. It's one of the reasons for the last elections, to have a board that will guarantee rubber stamp approvals. We have an application, but its just used for impression management, to look official. As long as the buyer has the cash to pay the seller, it doesn't matter if the buyer after forking over the cash, is a smoker or is an investor. When you have a cheap and greedy community the application process is not an issue and you will never see all those piles of paper like you see in the picture.
  • Somewhat less draconian reasons for slow application review and decision than those described by Anthony are simply board logistics and availability. Boards are composed of volunteers who almost always have work/life responsibilities in addition to (and may take priority over) reviewing purchase applications. If there is a major situation affecting the building when an application is received, most boards will put the review off until the situation is stabilized and/or resolved. Board members get sick, go on vacation, have work and family obligations, and generally do not have the same degree of availability as a full-time and compensated employee. This is the fallacy of the current legislative proposals to impose time limits with penalties on purchase application review and decision. Volunteer, part-time co-op board members cannot be held to the same processing standards as full-time paid employees. It's an unfair imposition on those who give of their time to keep the co-op running smoothly and efficiently, and can ultimately act as a deterrent to qualified individuals who want to serve their communities. I believe most boards want to do the right thing for their existing and perspective shareholders. Delays are inevitable, especially when board work may be subordinate to family and employment obligations. Sellers and purchasers should receive status updates if there are going to be delays, but I would rather live in a building that did its due diligence than one that rushed through an unwise decision.
  • All hail, Steven424. Ours is a non-profit co-op. As such, a potential buyer isn't really a representation of a serious cash infusion. But, Steven424's point is profoundly felt by this co-operator - we are volunteers with all the conflicts/competing demands that he mentions, with health issues thrown into the mix. AND NO ONE ELSE INTERESTED IN DOING THE REAL WORK OF THE BOARD! Folks may be interested in what they perceive as the gossip, or 'inside news' of the Board, but the interest ends there. I won't go on, you get the picture. Thanks for the soapbox!
  • Why on earth is a "slow" decision blamed on the board? Our co-op has a standard NYC co-op application whose contents should be of no surprise to any competent broker. Board review could be infinitely sped up if the brokers did their JOBS and made sure that everything listed as required in the application is actually IN the submitted board package. If it is not, the broker/seller/buyer/attorneys/etc should NOT have the gall to complain to the board that the review process is taking too long. And no we are not going to spoonfeed the broker a list of what is missing. The broker is paid 3-6% of the sales price, literally tens of thousands of dollars. The volunteer board is paid nothing to wade through these 1.5-inch garbage piles.