Purchasing a co-op in New York City can be a real odyssey. Even with thousands of options on the market, securing a place that fits your lifestyle and budget can leave you with only a handful of viable choices. Factor in each building’s financial requirements and you may be down to just two or three co-ops that you qualify for. And then there’s the interview with the board, a nerve-wracking process even for the most well qualified applicant. But even after the stress and paperwork, many applicants don't make it past the finish line. For a successful admission process for both boards and applicants, there are several legal and practical matters that both parties should keep in mind.
Who is the Best Applicant?
Like every business, each co-op board is different, and this individuality pertains to the admission process as well. When prospective buyers are looking into purchasing a co-op, they typically complete a board package that is a complete picture of their financial history. Boards want to see financially stable individuals who will be able to cover maintenance fees, mortgage payments and closing costs, while still having reserves. “The one color you can discriminate is green, which is credit,” says attorney Neil Garfinkel of the law firm of Abrams Garfinkel Margolis Bergson LLP in Manhattan. “Boards want to see where your income is coming from.”
In order to make decisions about an applicant’s finances, boards will typically ask for two years of signed income tax returns and W2 forms, bank statements, and your last three pay stubs. Many boards also want applicants to include letters of reference from both personal and business sources. They may even include a questionnaire. A licensed broker can help applicants assemble the package, ensuring that they include all required paperwork and turn it in before deadline.
Besides finances and personality, boards are limited in their criteria used to accept or reject applicants. Garfinkel says that the board cannot discriminate based on the protected categories of age, citizenship, color, familial status, handicap, marital or partnership status, race, occupation, religion, sex and source of income. He adds that New York City has the most protected classes, compared to the state and even the Fair Housing Act of 1968, which is federal law.
If after reviewing the board package the board feels like the applicant meets their financial and lifestyle criteria, they will invite them over for an interview. For many applicants, this is the most stressful part of the process. The board has the power to ask the applicant more questions relating to their finances or lifestyle, but cannot ask any questions relating to the protected categories, says Frederick Peters, a licensed broker and president of Warburg Realty in Manhattan. For example, many boards may ask why your income has dropped, or if you are planning on doing renovations in the future. Depending on the co-op and the board, the interview can be short and succinct or lengthy and thorough almost to the point of feeling intrusive.