Co-ops are a unique type of residential property that provide many benefits suitable for those looking for a single-family or condo alternative. The process of purchasing or selling a co-op comes with an equally unique set of challenges that can be significantly reduced with the right legal representation. Co-ops operate more like stocks than property. Unlike single-family homes or condos which have deeds for each unit and can be bought or sold outright, tenants of a co-op own shares in the entire cooperative, proportional to the size of their unit. This means all shareholders-tenants are responsible for the building’s maintenance, and they each get a say on any changes being made to the property, regardless if said changes will have a direct impact on their individual unit or not. There are many difficulties that come with navigating the sale or purchase of such an unusual entity. The real estate attorneys at Zimmet Law Group P.C. have extensive experience guiding countless clients to successful co-op closings in New York City and the surrounding area.
If you are considering purchasing a co-op unit in New York City, there are a number of legal considerations you should keep in mind. Here are some key points to consider before you make your purchase:
Before you can close a co-op transaction, you must first be approved by the co-op board. This process can be lengthy, complex, and will involve a personal interview, as the board will want to review your financial history, credit score, and other personal information to ensure that you are a responsible and trustworthy candidate for ownership. It is recommended to work closely with a qualified real estate agent who can guide you through this process and help ensure that your application is complete and accurate. If unfortunately, the co-op board denies your application, you are entitled to receive the refund of the contract deposit. Our real estate attorneys will ensure proper provisions are included in the contract to protect your interests.
Before entering the contract purchasing a co-op unit, it is highly recommended to conduct a thorough review of the co-op documents, such as proprietary lease, bylaw, most recent financial statement, budget, house rules, and board meeting minutes. These documents will disclose the financial health and daily management of the building as well as the rules and regulations of the co-op association, including use and maintenance of the unit, restrictions on the use of common areas, parking spaces, and other amenities. Good due diligence may even help uncover any history of adverse conditions pertaining to the unit that the seller may have failed to disclose. It is important to read these documents carefully and understand your rights and responsibilities as a co-op owner.
Financing a co-op purchase in New York City can be challenging, as lenders often have strict requirements for co-op loans. For example, many lenders require that the co-op building be at least 50% owner-occupied and may also require that the building have adequate reserves and insurance. It is recommended to work with an institutional lender that has approved the co-op project in the last two years.
Finally, it is important to ensure that the title to stock shares allocated to your co-op unit is clear and free of any liens or other encumbrances. Your real estate attorney will order and review the co-op lien search to uncover any potential issues and can help you resolve any problems before closing. Once the title is clear, you will need to attend a closing meeting to sign all of the necessary documents and transfer ownership of the co-op unit to you.
Selling a co-op in New York can be a complex process, but with the right guidance and preparation, you can ensure that your sale goes smoothly and that you get the best possible price for your investment.
Working with a qualified real estate agent who has experience selling co-ops in the local community can be invaluable. Your agent can help you set the right price for your unit, market your co-op to potential buyers, hold open houses, negotiate offers and evaluate the financial strength of any potential buyer’s financials.
Once you accept an offer from a potential buyer, it is time to engage with an experienced real estate attorney who can help you draft, negotiate and understand the terms of the sales contract. In the meantime, you will work with your real estate agent to collect necessary co-op documents and provide them to your buyer for their due diligence. Our experienced attorneys will help tailor the contract terms toward a successful closing.
If you would like to have a consultation with one of our real estate attorneys, please call us at (212) 922-1330 or fill out our Contact Us form.