Archive for The Board Process
Lawyer’s Guide to Preparing for a Board Interview
Posted by: | CommentsCongratulations, your presence has been requested for an Interview with the Co-op Board of the building where you’ve been dreaming of living since you found the ‘perfect home’. You’ve been on the roller-coaster ride for what seems like a decade, with contract negotiations, baring your financial soul to all and sundry, and soliciting reference letters to complete the co-op board application. Now is the big day – the Board Interview.
Board interviews are near the top of the strangest and most stressful things New York City residents go through while trying to put a roof over their head. Having enough money to buy the apartment is just not enough; you must pass the interview as well. Interviews run from basic and routine to a microscopic examination of your life and very grueling.
While real estate brokers are typically involved in preparing clients for interviews, sometimes lawyers have the perspective to see the mistakes that sink their contract at the last minute in the interview process. Here are a few tips from one lawyer who has lived through board rejections:
- Don’t Lie. Tempting as it may seem to lie to avoid conflict, it is likely the truth is less damaging than the lie. Trying to cover up the youthful indiscretion that landed you in jail for the night won’t win you any brownie points with the Board. Chances are if they’re asking you about your arrest record, they already know the answer and want to see if you’ll fess up. Explain that you’re not proud of that time and it’s something that you’ve never repeated.
- Explain Renovation Plans in the Right Context: If the apartment is in desperate need of renovation, the board members interviewing you are aware of the situation and are looking forward to someone bringing that unit up to date to increase market value, and create good comps for the other units. Present the plans in the correct light: “You want to update the apartment and have carefully reviewed the alteration policies of the board and plan to follow them to the letter”.
- Be Candid About Your Plans for Using the Apartment: Some boards are not fond of absentee owners, because they typically tend to have lots of guests and generally don’t spend as much money on upkeep on the apartment as those who make the apartment their primary residence. If you plan to use the apartment as a secondary residence, be honest about it and address their concerns.
- Remember the Pets: If you have a pet, be honest about it, and stress that yours are obedient and not a trouble-maker. Explain you have read the rules and understand when and where pets are allowed on elevators and in the lobby. Reassure them that the animal will not be a danger to anyone in the building. You may even be asked to bring your pet in for an interview.
Lastly, be yourself and at ease. Rely on your Broker to prepare you for the process. If for some reason the board rejects you, remember the immortal words of Groucho Marks “I don’t care to belong to a club that accepts people like me!”
Based on article by Jerry M Feeney, Residential Real Estate Lawyer.
What Co-op Boards look for in your Financials
Posted by: | CommentsMany co-op boards do a cursory examination of your application: review financials, check references, interview and make a decision. But what does it mean ‘review financials’? In the old days, if the bank gave the ok for financing, that was ‘good enough’; but not anymore.
So what do they look at?
- Debt-to-income ratio
- Mortgage lenders generally want no more than 28% of a buyer’s gross monthly income to the mortgage payment (Principal, Interest, Taxes and Insurance), or a maximum of 36% for PITI and recurring debt (loans, credit card payments, child support, etc)
- Co-op Boards usually want to see something closer to 25-30% debt-to-income
- Income – liquid income
- Generally the last 3 years of tax returns are reviewed for gross income and adjusted gross income
- Earning Potential – if your earnings are less than board guidelines, or assets are too weak, but you can show potential for increased income, the board may approve with conditions such as a year’s maintenance held in escrow.
- Debts
- Boards also consider other debts, student loans, car loans, other mortgages.
- Other Factors
- Location – locations such as Brooklyn or Queens may be less likely to look for large assets and permit more financing than a building on Park Avenue in Manhattan
- Building size – larger buildings could be easier to buy into than smaller buildings because one or two arrears owners have less impact in a 200 unit building than a 20 unit building.
Boards want to protect their co-op, choosing people who are the right fit. They also need to stay within the boundaries of discrimination laws. Reviewing the financials allows the board to decide whether to move forward or not without violating the discrimination laws.
Excerpted from Habitat article
The Admission Process
Posted by: | CommentsYou like the building and apartment, you’ve agreed on the price. Now it’s up to the board. Financially and personally, the co-op board approval process is all about whether you are a good fit for the building. It can seem simple or complex, or simply perplexing. You want to know what is expected of you, either ahead of time or during the interview.
A few tips to make it through the process:
- The board can be discriminating (picky if you will) but not discriminate for reasons of race, color, religion, national origin, sex, age, family make up, disability, sexual orientation or citizenship status.
- Appropriate information for basing a decision
- Can you afford to pay maintenance charges
- How many people will live in the unit
- Income, credit, residential history and employment history
- Some boards request a preliminary application which is reviewed by a board screening committee to determine if a purchaser is eligible. If so they move forward with the full application package.
- Application package
- Residential History
- Bank history
- Employment History
- Hobbies and Interests
- Interest in board or committee service
- Anyone who will live in the apartment
- Full financial disclosures. See our post: What Co-op Boards look for in your Financials.
- Community Values
- Assess compatibility with the co-op and its character.
- Some boards allow opportunity for you to ask your own questions
- Have pets? Some boards want to ‘interview’ them as well (Read about it in our article: Co-op Board Interview for Pets!)
- Each board has their own guidelines
- After the Interview
- After review, the committee will give recommendation to the board, who votes on the purchase.
- Letter sent to seller with decision, with copy to purchaser and co-op’s attorney
- Co-op’s attorney will communicate with all attorneys involved to arrange closing.
Excerpted from Habitat article
Co-op Board Interviews for Pets!
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People tend to find Co-op Board interviews difficult, if not downright stressful. Some co-op Boards are now requiring applicants to submit their dogs for interviews as well. Owner/Applicants can also be required to submit letters of recommendation from dog walkers, neighbors and groomers for their pet.
There are a number of trainers who now specialize in preparing dogs who face the scrutiny by New York City co-op boards. Ms. Renee Payne, owner of Walk This Way , a canine behavior therapist designed an interactive interview process for co-op buildings to evaluate potential canine residents.
- Frustration tests to see how easily a dog loses patience and whether or not it acts out if it does not get what they wanted on demand.
- Separation Anxiety tests to determine if the dog can remain calm when the owner is asked to leave during the interview.
- An Elevator test to see a dog’s response riding the elevator and strangers getting on and off.
- Doorbell tests to see how many times the dog will bark when the doorbell is rung.
Excerpted from New York Times Article by Sarah Kershaw on August 23, 2011.
Manhattan Co-op Board to Madonna: Be Quiet Or Get Out!
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Madonna’s Upper West Side co-op board is threatening to evict the Material Girl. According to a lawsuit filed by her upstairs neighbor Karen George, Madonna is using her Central Park West pied a terre ” as a rehearsal studio, forcing neighbors to endure “blaring music, stomping and shaking walls,” for up to three hours each day.
When a colleague sent me this link reporting the story, I remembered a similar problem that my wife and I had with an upstairs neighbor (not music- but walking both human and canine). Fortunately, carpeting resolved the problem and our “quiet enjoyment” was restored. If you live in New York City you should expect noise from police cars to fire engine sirens, horns and car alarms, garbage trucks and yes from your neighbors as well.
If you are moving from a quiet suburban neighborhood or if you are particularly sensitive to noise here are some suggestions to test your decibel tolerance before you buy an apartment in Manhattan.
- If the apartment is located near an elevator, public laundry room or trash room make sure mechanical noises can’t be heard.
- Check to see if the windows have been upgraded to reduce street noises as well as energy costs.
- Depending on the floor of the apartment, you may want to listen carefully- especially in rear courtyard facing rooms-for fans and other mechanical noise creating devices on adjacent rooftops.
- Ask the seller’s/showing broker to turn off or lower any music playing in the apartment.
- Before signing the contract, visit the apartment at different times of the day. A morning visit will expose the going to work noises, an afternoon visit will let you concentrate on street and traffic sounds and the evening visit may give you some insight into the level of noise you can expect from prospective neighbors are reading or blaring their music or TVs?
- As part of your due diligence, you and/or your attorney should read the co-op or condo meeting minutes and see if there are any noise issues discussed.
Generally speaking, a co-op board will have more jurisdiction and clout over noise matters. Based on their bylaws a co-op board may be able to levy fines until the offending shareholder complies or, as with Madonna, threaten and ultimately have the shareholder evicted. Condos generally do not have this power and, it may be completely up to you to bring any legal pressure on your fellow condo neighbor.
