In many ways, purchasing a coop requires more legal work than a single family home or condominium. You must first find out whether or not your unit is exempt from cooperative board approval. If not, you must go through the board approval process. Will you be living in the unit? Are you planning to rent it out? If you are, you need to ensure that rentals are permitted before you sign the contract.
As a purchaser, you need to review the offering plan and proprietary lease. If rentals are permitted, you need to review the sublet application and sublet policy. Some coops charge a monthly portion of your rent as a sublet fee imposed on you. Other coops charge a sublet fee equal to a percentage increase above your regular monthly maintenance.
You must also review the financial reserves of the cooperative corporation, necessary capital improvements, whether or not the apartments are HDFC apartments, and if the unit is an A.I.R. unit that was originally meant for artists. Other considerations are the short and long-term debt payable. The maturity date of the building mortgage must also be reviewed. The total monthly maintenance revenue, compared to the total monthly expenses, and any mandatory assessments, must also be considered.
Finally, your attorney should review the board minutes. The purpose of the board minute review is to be sure that you know the recent history of issues in the building. While these minutes are often redacted by the Board’s counsel, they may disclose pending litigation, increases in maintenance or assessments, and changes to sublet, pet, or parking policies.
There are differences between the levels of expertise and service you may receive from real estate attorneys. That is why in New York City, an attorney in Queens might charge $700 for a coop purchase, while an attorney in Manhattan might charge $4,500. Simply put, you do get what you pay for. No attorney that charges bargain basement prices is going to spend the 5 to 10 hours it will take to do a comprehensive due diligence analysis. A great criminal lawyer is not a great real estate attorney. Whether $150,000 or $1,000,000, you should not gamble your home.
For our concierge clients, our Platinum Property Transfer System enables busy professionals and entrepreneurs to do what you do best. This enables you to often earn many times what our legal fee is by focusing on your career. Our concierge practice allows you to avoid attending the closing by entrusting the entire process to us, if you so desire. We use our expertise to permit you to buy or sell properties with minimal involvement and enjoy a completely stress free transaction.
John has written an e-book, Big Apple Guide to NY Real Estate Transactions. It is available to answer questions that you may still have. Please provide your first name and email in the box below to download it now. We are attorneys and not salespeople. Nobody will ever call. There is no obligation. John simply asks that you email him to tell him what you liked or did not like about the book.